Tag: consumer

Is the consumer edge opportunity overlooked?

Consumer edge offers growth

There are many use cases for consumer edge. The majority of consumer digital services are delivered from the cloud, or more accurately from a combination of cloud and on-device processing. This is true for web, mobile, PC and smart device applications.

Generally edge computing is about moving compute close to where data is generated or consumed, although the actual edge location can vary according to scenarios, use case and perspective. It could imply deploying servers per country as opposed to servers per continent. Or it could mean deploying servers in a regional data centre, a telco/ISP network, a stadium or in a home.

Most telco industry focus on edge has been for enterprise use cases (manufacturing, robotics, predictive maintenance, video analytics, etc) with B2B and B2B2B models. This follows the attention given to private networks and enterprise accounts to find incremental revenues from 5G deployments. It is notionally easier to envisage migrating enterprise single-site on-premises workloads to telco edge in a single operator managed environment, than to contemplate consumer use cases with requirements which are inherently more distributed and multi operator. However, consumer use cases are where we expect to see most of the distributed edge (where processing occurs across multiple edge locations and providers) over the next five years.

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Defining the consumer edge

We define “consumer edge” to be where edge computing is used to enable or enhance a consumer service or consumer user experience. The edge resources may be located on-premises (e.g. at home or in a public venue), in their connectivity service provider’s network (ISP, fixed, mobile network) or in a regional location (data centre, interconnect or internet exchange) and represents a shift of compute resources either from an end device or out of the traditional cloud. This is not to say that all the functionality of a use case will “be edge” as in reality some or much of the compute will remain on device and in “the cloud”. Nevertheless, there will be specific rationale and benefit to process some of the experience at the edge (see later).

The consumer edge continuum

Source: STL Partners

Edge nodes are either purchased from an edge compute service provider or implemented by the service provider themselves. The edge resources may be paid for by consumers within a premium service offering (B2C) or paid for by the consumer service provider.

Moving to the consumer edge

There are two broad directions of travel to the edge related to consumer use cases and the underlying compute workloads required to support them – device offload and cloud offload.

Device offload

Consumer digital services are traditionally accessed via smartphones, tablets, PCs, and laptops. Increasingly a whole host of other connected devices need to be considered in the mix; smart TVs, media streaming devices, smart home sensors, wearables (AR glasses, VR headsets, watches), projectors, 360 cameras, etc. Smartphones and tablets alone vary significantly in terms of their compute, storage and display capabilities. Reaching more device types adds a wider range of connectivity and processing capabilities, memory and electrical power capacity. AR/VR and AI/ML place high demands on processing which consumes power and generates heat while adding higher capacity batteries increases form factor and weight. Edge computing can help consumer electronics devices by shifting compute intensive workloads away from the end device to be processed on a capable edge node and sending the results back to the end device.

Cloud offload

Consumer digital consumer services are traditionally served from the cloud and delivered over the internet. Their servers will be physically located at one or more central data centres around the world operated by the hyperscalers (AWS, MS and Google) or other internet hosting companies. Regular web content is routinely distributed from these central servers closer to consumers using content delivery networks (CDNs). This is fine for static content and reduces latency, server load and data transit, enabling the internet to efficiently deliver vast quantities of content worldwide. However, for interactive experiences with more complex user interactions requiring server processing, CDNs may not be technically capable and reducing end-end latency becomes even more critical. Additionally serving the user from far away for high bandwidth interactive experiences, can result in inefficient data transit, network congestion and poor user experience. Edge computing can help by offering cloud off-load where certain workloads are moved to an edge node closer to the consumer.

 

Table of Contents

  • Executive Summary
  • Recommendations for telcos
  • Introduction
    • Defining the consumer edge
    • Moving to the edge
  • Sizing the market
  • Consumer use cases
    • Content delivery
    • Real time interactive experiences
    • Cloud gaming
    • Smart homes
    • Smart places
    • Smart vehicles
    • Data residency
  • Telco opportunities in consumer edge
    • Content delivery
    • Build experience delivery networks
    • On demand networks
    • Enter the smart home
  • Conclusion

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Apple Glass: An iPhone moment for 5G?

Augmented reality supports many use cases across industries

Revisiting the themes explored in the AR/VR: Won’t move the 5G needle report STL Partners published in January 2018, this report explores whether augmented reality (AR) could become a catalyst for widespread adoption of 5G, as leading chip supplier Qualcomm and some telcos hope.

It considers how this technology is developing, its relationship with virtual reality (VR), and the implications for telcos trying to find compelling reasons for customers to use low latency 5G networks.

This report draws the following distinction between VR and AR

  • Virtual reality: use of an enclosed headset for total immersion in a digital3D
  • Augmented reality: superimposition of digital graphics onto images of the real world via a camera viewfinder, a pair of glasses or onto a screen fixed in real world.

In other words, AR is used both indoors and outdoors and on a variety of devices. Whereas Wi-Fi/fibre connectivity will be the preferred connectivity option in many scenarios, 5G will be required in locations lacking high-speed Wi-Fi coverage.  Many AR applications rely on responsive connectivity to enable them to interact with the real world. To be compelling, animated images superimposed on those of the real world need to change in a way that is consistent with changes in the real world and changes in the viewing angle.

AR can be used to create innovative games, such as the 2016 phenomena Pokemon Go, and educational and informational tools, such as travel guides that give you information about the monument you are looking at.  At live sports events, spectators could use AR software to identify players, see how fast they are running, check their heart rates and call up their career statistics.

Note, an advanced form of AR is sometimes referred to as mixed reality or extended reality (XR). In this case, fully interactive digital 3D objects are superimposed on the real world, effectively mixing virtual objects and people with physical objects and people into a seamless interactive scene. For example, an advanced telepresence service could project a live hologram of the person you are talking to into the same room as you. Note, this could be an avatar representing the person or, where the connectivity allows, an actual 3D video stream of the actual person.

Widespread usage of AR services will be a hallmark of the Coordination Age, in the sense that they will bring valuable information to people as and when they need it. First responders, for example, could use smart glasses to help work their way through smoke inside a building, while police officers could be immediately fed information about the owner of a car registration plate. Office workers may use smart glasses to live stream a hologram of a colleague from the other side of the world or a 3D model of a new product or building.

In the home, both AR and VR could be used to generate new entertainment experiences, ranging from highly immersive games to live holograms of sports events or music concerts. Some people may even use these services as a form of escapism, virtually inhabiting alternative realities for several hours a day.

Given sufficient time to develop, STL Partners believes mixed-reality services will ultimately become widely adopted in the developed world. They will become a valuable aid to everyday living, providing the user with information about whatever they are looking at, either on a transparent screen on a pair of glasses or through a wireless earpiece. If you had a device that could give you notifications, such as an alert about a fast approaching car or a delay to your train, in your ear or eyeline, why wouldn’t you want to use it?

How different AR applications affect mobile networks

One of the key questions for the telecoms industry is how many of these applications will require very low latency, high-speed connectivity. The transmission of high-definition holographic images from one place to another in real time could place enormous demands on telecoms networks, opening up opportunities for telcos to earn additional revenues by providing dedicated/managed connectivity at a premium price. But many AR applications, such as displaying reviews of the restaurant a consumer is looking at, are unlikely to generate much data traffic. the figure below lists some potential AR use cases and indicates how demanding they will be to support.

Examples of AR use cases and the demands they make on connectivity


Source: STL Partners

Although telcos have always struggled to convince people to pay a premium for premium connectivity, some of the most advanced AR applications may be sufficiently compelling to bring about this kind of behavioural shift, just as people are prepared to pay more for a better seat at the theatre or in a sports stadium. This could be on a pay-as-you-go or a subscription basis.

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The pioneers of augmented reality

Augmented reality (AR) is essentially a catch-all term for any application that seeks to overlay digital information and images on the real-world. Applications of AR can range from a simple digital label to a live 3D holographic projection of a person or event.

AR really rose to prominence at the start of the last decade with the launch of smartphone apps, such as Layar, Junaio, and Wikitude, which gave you information about what you were looking at through the smartphone viewfinder. These apps drew on data from the handset’s GPS chip, its compass and, in some cases, image recognition software to try and figure out what was being displayed in the viewfinder. Although they attracted a lot of media attention, these apps were too clunky to break through into the mass-market. However, the underlying concept persists – the reasonably popular Google Lens app enables people to identify a product, plant or animal they are looking at or translate a menu into their own language.

Perhaps the most high profile AR application to date is Niantic’s Pokemon Go, a smartphone game that superimposes cartoon monsters on images of the real world captured by the user’s smartphone camera. Pokemon Go generated $1 billion in revenue globally just seven months after its release in mid 2016, faster than any other mobile game, according to App Annie. It has also shown remarkable staying power. Four years later, in May 2020, Pokemon Go continued to be one of the top 10 grossing games worldwide, according to SensorTower.

In November 2017, Niantic, which has also had another major AR hit with sci-fi game Ingress, raised $200 million to boost its AR efforts. In 2019, it released another AR game based on the Harry Potter franchise.

Niantic is now looking to use its AR expertise to create a new kind of marketing platform. The idea is that brands will be able to post digital adverts and content in real-world locations, essentially creating digital billboards that are viewable to consumers using the Niantic platform. At the online AWE event in May 2020, Niantic executives claimed “AR gamification and location-based context” can help businesses increase their reach, boost user sentiment, and drive foot traffic to bricks-and-mortar stores. Niantic says it is working with major brands, such as AT&T, Simon Malls, Starbucks, Mcdonalds, and Samsung, to develop AR marketing that “is non-intrusive, organic, and engaging.”

The sustained success of Pokemon Go has made an impression on the major Internet platforms. By 2018, the immediate focus of both Apple and Google had clearly shifted from VR to AR. Apple CEO Tim Cook has been particularly vocal about the potential of AR. And he continues to sing the praises of the technology in public.

In January 2020, for example, during a visit to Ireland, Cook described augmented reality as the “next big thing.”  In an earnings call later that month, Cook added: “When you look at AR today, you would see that there are consumer applications, there are enterprise applications. … it’s going to pervade your life…, because it’s going to go across both business and your whole life. And I think these things will happen in parallel.”

Both Apple and Google have released AR developer tools, helping AR apps to proliferate in both Apple’s App Store and on Google Play.  One of the most popular early use cases for AR is to check how potential new furniture would look inside a living room or a bedroom. Furniture stores and home design companies, such as Ikea, Wayfair and Houzz, have launched their own AR apps using Apple’s ARKit. Once the app is familiar with its surroundings, it allows the user to overlay digital models of furniture anywhere in a room to see how it will fit. The technology can work in outdoor spaces as well.

In a similar vein, there are various AR apps, such as MeasureKit, that allow you to measure any object of your choosing. After the user picks a starting point with a screen tap, a straight line will measure the length until a second tap marks the end. MeasureKit also claims to be able to calculate trajectory distances of moving objects, angle degrees, the square footage of a three-dimensional cube and a person’s height.

Table of contents

  • Executive Summary
    • More mainstream models from late 2022
    • Implications and opportunities for telcos
  • Introduction
  • Progress and Immediate Prospects
    • The pioneers of augmented reality
    • Impact of the pandemic
    • Snap – seeing the world differently
    • Facebook – the keeper of the VR flame
    • Google – the leader in image recognition
    • Apple – patiently playing the long game
    • Microsoft – expensive offerings for the enterprise
    • Amazon – teaming up with telcos to enable AR/VR
    • Market forecasts being revised down
  • Telcos Get Active in AR
    • South Korea’s telcos keep trying
    • The global picture
  • What comes next?
    • Live 3D holograms of events
    • Enhancing live venues with holograms
    • 4K HD – Simple, but effective
  • Technical requirements
    • Extreme image processing
    • An array of sensors and cameras
    • Artificial intelligence plays a role
    • Bandwidth and latency
    • Costs: energy, weight and financial
  • Timelines for Better VR and AR
    • When might mass-market models become available?
    • Implications for telcos
    • Opportunities for telcos
  • Appendix: Societal Challenges
    • AR: Is it acceptable in a public place?
    • VR: health issues
    • VR and AR: moral and ethical challenges
    • AR and VR: What do consumers really want?
  • Index

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The changing consumer landscape: Telco strategies for success

Winning in the evolving “in home” consumer market

COVID-19 is accelerating significant and lasting changes in consumer behaviours as the majority of the population is being implored to stay at home. As a result, most people now work remotely and stay connected with colleagues, friends, and family via video conferencing. Consumer broadband and telco core services are therefore in extremely high demand and, coupled with the higher burden on the network, consumers have high expectations and dependencies on quality connectivity.

Furthermore, we found that people of all ages (including non-digital natives) are becoming more technically aware. This means they may be willing to purchase more services beyond core connectivity from their broadband provider. At the same time, their expectations on performance are rising. Consumers have a better understanding of the products on offer and, for example, expect Wi-Fi to deliver quoted broadband speeds throughout the house and not just in proximity to the router.

As a result of this changing landscape, there are opportunities, but also challenges that operators must overcome to better address consumers, stay relevant in the market, and win “in the home”.

This report looks at the different strategies telcos can pursue to win “in the home” and address the changing demands of consumers. It draws on an interview programme with eight operators, as well as a survey of more than 1100+ consumers globally . As well as canvassing consumers’ high level views of telcos and their services, the survey explores consumer willingness to buy cybersecurity services from telcos in some depth.

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With increasing technical maturity comes an increasingly demanding market

Consumers are increasing in technical maturity

The consumer market as a whole is becoming much more digital. Over the past decade there has been a big shift towards online and self-service models for B2C services (e.g. ecommerce, online banking, automated chatbots, video streaming). This reflects the advent of the Coordination Age – connecting people to machines, information, and things – and the growing technical maturity of the consumer market.

COVID-19 has been a recent, but significant, driver in pushing consumers towards a more digital age, forcing the use of video conferencing and contactless interactions. Even people who are not considered digitally native are becoming increasingly tech savvy and tech capable customers.

Cisco forecasts that, between 2018 and 2023, the number of Internet users globally will increase from 51% to 66% . It has also forecast an increase in data volumes per capita per month from 1.5GB in 2017 to 9.7GB in 2022 . Depending on the roll out of 5G in different markets, this number may increase significantly as demand for mobile data increases to meet the potential increases in supply.

Furthermore, in our survey of 1,100+ consumers globally, 33% of respondents considered themselves avid users and 51% considered themselves moderate users of technology. Only 16% of the population felt they were light users, using technology only when essential for a limited number of use cases and needing significant support when purchasing and implementing new technology-based solutions.

Though this did not vary significantly by region or existing spend, it did vary (as would be expected) by age – 51% of respondents aged between 25 and 30 considered themselves avid users of technology, while only 18% of respondents over 50 said the same. Nevertheless, even within the 50+ segment, 55% considered themselves moderate users of technology.

Self-proclaimed technical maturity varies significantly by age

Source: STL Partners consumer survey analysis (n=1,131)

The growing technical maturity of consumers suggests a larger slice of the market will be ready and willing to adopt digital solutions from a telco, providing an opportunity for potential growth in the consumer market.

Consumers have higher expectations on telco services

Coupled with the increasing technical maturity comes an increase in consumer expectations. This makes the increasing technical maturity a double edged sword – more consumers will be ready to adopt more digital solutions but, with a better understanding of what’s on offer, they can also be more picky about what they receive and more demanding about performance levels that can be achieved.

An example of this is in home broadband. It is no longer sufficient to deliver quoted throughput speeds only within proximity to the router. A good Wi-Fi connection must now permeate throughout the house, so that high-quality video content and video calls can be streamed from any room without any drop in quality or connection. It must also be able to handle an increasing number of connected devices – Cisco forecasts an increase from a global average of 1.2 to 1.6 connections per person between 2018 and 2023 .

Consumers are also becoming increasingly impatient. In all walks of life, whether it be dating, technology or experiences, consumers want instant gratification. Additionally, with the faster network speeds of 4G+, fibre, and eventually 5G, consumers want (and are used to) continuous video feeds, seamless streaming, and near instant downloads – buffering should be a thing of the past.

One of our interviewees, a Northern European operator, commented: “Consumers are not willing to wait, they want everything here, now, immediately. Whether it is web browsing or video conferencing or video streaming, consumers are increasingly impatient”.

However, these demands extend beyond telco core services and connectivity. In the context of digital maturity, a Mediterranean operator noted “There is increasing demand for more specialized services…there is more of a demand on value-added, rather than core, services”.

This presents new challenges and opportunities for operators seeking growth “in the home”. Telcos need to find a way to address these changing demands to stay relevant and be successful in the consumer market.

Table of Contents

  • Executive summary
  • Introduction
  • Growing demand for core broadband and value-added services
    • COVID-19 is driving significant, and likely lasting, change
    • With increasing technical maturity comes an increasingly demanding market
  • Telcos need new ways to stay relevant in B2C
    • The consumer market is both diverse and difficult to segment
    • Should telcos be looking beyond the triple play?
  • How can telcos differentiate in the consumer market?
    • Differentiate through price
    • Differentiate through new products beyond connectivity
    • Differentiate through reliability of service
  • Conclusions and key recommendations
  • Appendices
    • Appendix 1: Consumer segments used in the survey
    • Appendix 2: Cybersecurity product bundles used in the conjoint analysis

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Cloud gaming: What is the telco play?

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Drivers for cloud gaming services

Although many people still think of PlayStation and Xbox when they think about gaming, the console market represents only a third of the global games market. From its arcade and console-based beginnings, the gaming industry has come a long way. Over the past 20 years, one of the most significant market trends has been growth of casual gamers. Whereas hardcore gamers are passionate about frequent play and will pay more to play premium games, casual gamers play to pass the time. With the rapid adoption of smartphones capable of supporting gaming applications over the past decade, the population of casual/occasional gamers has risen dramatically.

This trend has seen the advent of free-to-play business models for games, further expanding the industry’s reach. In our earlier report, STL estimated that 45% of the population in the U.S. are either casual gamers (between 2 and 5 hours a week) or occasional gamers (up to 2 hours a week). By contrast, we estimated that hardcore gamers (more than 15 hours a week) make up 5% of the U.S. population, while regular players (5 to 15 hours a week) account for a further 15% of the population.

The expansion in the number of players is driving interest in ‘cloud gaming’. Instead of games running on a console or PC, cloud gaming involves streaming games onto a device from remote servers. The actual game is stored and run on a remote compute with the results being live streamed to the player’s device. This has the important advantage of eliminating the need for players to purchase dedicated gaming hardware. Now, the quality of the internet connection becomes the most important contributor to the gaming experience. While this type of gaming is still in its infancy, and faces a number of challenges, many companies are now entering the cloud gaming fold in an effort to capitalise on the new opportunity.

5G can support cloud gaming traffic growth

Cloud gaming requires not just high bandwidth and low latency, but also a stable connection and consistent low latency (jitter). In theory, 5G promises to deliver stable ultra-low latency. In practice, an enormous amount of infrastructure investment will be required in order to enable a fully loaded 5G network to perform as well as end-to-end fibre. 5G networks operating in the lower frequency bands would likely buckle under the load if lots of gamers in a cell needed a continuous 25Mbps stream. While 5G in millimetre-wave spectrum would have more capacity, it would require small cells and other mechanisms to ensure indoor penetration, given the spectrum is short range and could be blocked by obstacles such as walls.

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A complicated ecosystem

As explained in our earlier report, Cloud gaming: New opportunities for telcos?, the cloud gaming ecosystem is beginning to take shape. This is being accelerated by the growing availability of fibre and high-speed broadband, which is now being augmented by 5G and, in some cases, edge data centres. Early movers in cloud gaming are offering a range of services, from gaming rigs, to game development platforms, cloud computing infrastructure, or an amalgamation of these.

One of the main attractions of cloud gaming is the potential hardware savings for gamers. High-end PC gaming can be an extremely expensive hobby: gaming PCs range from £500 for the very cheapest to over £5,000 for the very top end. They also require frequent hardware upgrades in order to meet the increasing processing demands of new gaming titles. With cloud gaming, you can access the latest graphics processing unit at a much lower cost.

By some estimates, cloud gaming could deliver a high-end gaming environment at a quarter of the cost of a traditional console-based approach, as it would eliminate the need for retailing, packaging and delivering hardware and software to consumers, while also tapping the economies of scale inherent in the cloud. However, in STL Partners’ view that is a best-case scenario and a 50% reduction in costs is probably more realistic.

STL Partners believes adoption of cloud gaming will be gradual and piecemeal for the next few years, as console gamers work their way through another generation of consoles and casual gamers are reluctant to commit to a monthly subscription. However, from 2022, adoption is likely to grow rapidly as cloud gaming propositions improve.

At this stage, it is not yet clear who will dominate the value chain, if anyone. Will the “hyperscalers” be successful in creating a ‘Netflix’ for games? Google is certainly trying to do this with its Stadia platform, which has yet to gain any real traction, due to both its limited games library and its perceived technological immaturity. The established players in the games industry, such as EA, Microsoft (Xbox) and Sony (PlayStation), have launched cloud gaming offerings, or are, at least, in the process of doing so. Some telcos, such as Deutsche Telekom and Sunrise, are developing their own cloud gaming services, while SK Telecom is partnering with Microsoft.

What telcos can learn from Shadow’s cloud gaming proposition

The rest of this report explores the business models being pursued by cloud gaming providers. Specifically, it looks at cloud gaming company Shadow and how it fits into the wider ecosystem, before evaluating how its distinct approach compares with that of the major players in online entertainment, such as Sony and Google. The second half of the report considers the implications for telcos.

Table of Contents

  • Executive Summary
  • Introduction
  • Cloud gaming: a complicated ecosystem
    • The battle of the business models
    • The economics of cloud gaming and pricing models
    • Content offering will trump price
    • Cloud gaming is well positioned for casual gamers
    • The future cloud gaming landscape
  • 5G and fixed wireless
  • The role of edge computing
  • How and where can telcos add value?
  • Conclusions

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AI on the Smartphone: What telcos should do

Introduction

Following huge advances in machine learning and the falling cost of cloud storage over the last several years, artificial intelligence (AI) technologies are now affordable and accessible to almost any company. The next stage of the AI race is bringing neural networks to mobile devices. This will radically change the way people use smartphones, as voice assistants morph into proactive virtual assistants and augmented reality is integrated into everyday activities, in turn changing the way smartphones use telecoms networks.

Besides implications for data traffic, easy access to machine learning through APIs and software development kits gives telcos an opportunity to improve their smartphone apps, communications services, entertainment and financial services, by customising offers to individual customer preferences.

The leading consumer-facing AI developers – Google, Apple, Facebook and Amazon – are in an arms race to attract developers and partners to their platforms, in order to further refine their algorithms with more data on user behaviours. There may be opportunities for telcos to share their data with one of these players to develop better AI models, but any partnership must be carefully weighed, as all four AI players are eyeing up communications as a valuable addition to their arsenal.

In this report we explore how Google, Apple, Facebook and Amazon are adapting their AI models for smartphones, how this will change usage patterns and consumer expectations, and what this means for telcos. It is the first in a series of reports exploring what AI means for telcos and how they can leverage it to improve their services, network operations and customer experience.

Contents:

  • Executive Summary
  • Smartphones are the key to more personalised services
  • Implications for telcos
  • Introduction
  • Defining artificial intelligence
  • Moving AI from the cloud to smartphones
  • Why move AI to the smartphone?
  • How to move AI to the smartphone?
  • How much machine learning can smartphones really handle?
  • Our smartphones ‘know’ a lot about us
  • Smartphone sensors and the data they mine
  • What services will all this data power?
  • The privacy question – balancing on-device and the cloud
  • SWOT Analysis: Google, Apple, Facebook and Amazon
  • Implications for telcos

Figures:

  • Figure 1: How smartphones can use and improve AI models
  • Figure 2: Explaining artificial intelligence terminology
  • Figure 3: How machine learning algorithms see images
  • Figure 4: How smartphones can use and improve AI models
  • Figure 5: Google Translate works in real-time through smartphone cameras
  • Figure 6: Google Lens in action
  • Figure 7: AR applications of Facebook’s image segmentation technology
  • Figure 8: Comparison of the leading voice assistants
  • Figure 9: Explanation of Federated Learning

Digital Health: How Can Telcos Compete with Google, Apple and Microsoft?

Introduction

With the ever-increasing amount of data collected by smartphones, fitness monitors and smart watches, telcos and other digital players are exploring opportunities to create value from consumers’ ability to capture data on many aspects of their own health and physical activity. Connected devices leverage inbuilt sensors and associated apps to collect data about users’ activities, location and habits.

New health-focused platforms are emerging that use the data collected by sensors to advise individual users on how to improve their health (e.g. a reminder to stand up every 60 minutes), while enhancing their ability to share data meaningfully with healthcare providers, whether in-person or remotely. This market has thus far been led by the major Internet and device players, but telecoms operators may be able to act as distributors, enablers/integrators, and, in some cases, even providers of consumer health and wellness apps (e.g., Telefonica’s Saluspot).

High level drivers for the market

At a macro level, there are a number of factors driving digital healthcare.  These include:

  • Population ageing – The number of people globally who are aged over 65 is expected to triple over the next 30 years , and this will create unprecedented demand for healthcare.
  • Rising costs of healthcare provision globally – Serving an aging population, the increase globally in lifestyle and chronic diseases, and rising underlying costs, is pushing up healthcare spending – while at the same time, due to economic pressures there are more limited funds available to pay for this.
  • Limited supply of trained clinicians – Policy issues and changes in job and lifestyle preferences are limiting both educational capacity and ability to recruit and retain appropriately trained healthcare staff in most markets.
  • Shift in funding policy – In many countries, funding for healthcare is shifting away from being based on reimbursement-for-events (e.g., a practice or hospital is paid for every patient visit, for each patient they register, for each vaccination administered), to a greater emphasis on ‘value-based care’ – reimbursement based on successful patient health outcomes.
  • Increased focus on prevention in healthcare provision – in some cases funding is starting to be provided for preventative population health measures, such as weight-loss or quit-smoking programmes.
  • Development of personalised medicine – Personalised medicine is beginning to gain significant attention. It involves the delivery of more effective personalised treatments (and potentially drugs) based on an individual’s specific genomic characteristics, supported by advances in genotyping and analytics, and by ongoing analysis of individual and population health data.
  • Consumerisation of healthcare – There is a general trend for patients – or rather, consumers – to take more responsibility for their own health and their own healthcare, and to demand always-on access both to healthcare and to their own health information, at a level of engagement they choose.

The macro trends above are unlikely to disappear or diminish in the short-to-medium term; and providers, policymakers and payers  are struggling to cope as healthcare systems increasingly fall short of both targets and patients’ expectations.

Digital healthcare will play a key role in addressing the challenges these trends present. It promises better use and sharing of data, of analytics offering deep insight on health trends for individuals and across the wider population, and of the potential for greater convenience, efficacy and reach of healthcare provisioning.

While many (if not most) of the opportunities around digital health will centre on advances in healthcare providers’ ICT systems, there is significant interest in how consumer wellness and fitness apps and devices will contribute to the digital health ecosystem. Consumer digital health and wellness is particularly relevant to two of the trends above: consumerisation of healthcare, and the shift to prevention as a focus of both healthcare providers and payers.

Fitness trackers and smartwatches, and the associated apps for these devices, as well as wellness and fitness apps for smartphone users, could open up new revenue streams for some service providers, as well as a vast amount of personal data that could feed into both medical records and analytics initiatives. The increasing use of online resources by consumers for both health information and consultation, as well as cloud-based storage of and access to their own health data, also creates opportunities to make more timely and effective healthcare interventions.  For telcos, the question is where and how they can play effectively in this market.

Market Trends and Overview

The digital healthcare market is both very large and very diverse. Digital technologies can be applied in many different segments of the healthcare market (see figure below), both to improve efficiency and enable the development of new services, such as automated monitoring of chronic conditions.

The different segments of the digital healthcare market

Source: STL Partners based on categories identified by Venture Scanner

The various segments in Figure 1 are defined as below:

Wellness

  • Mobile fitness and health apps enable consumers to monitor how much exercise they are doing, how much sleep they are getting, their diet and other aspects of their lifestyle.
  • Wearable devices, such as smart watches and fitness bands, are equipped with sensors that collect the data used by fitness and health apps.
  • Electronic health records are a digital record of data and information about an individual’s health, typically collating clinical data from multiple sources and healthcare providers.

Information

  • Services search are digital portals and directories that help individuals find out healthcare information and identify potential service providers.
  • Online health sites and communities provide consumers with information and discussion forums.
  • Healthcare marketing refers to digital activities by healthcare providers to attract people to use their services.

Interactions

  • Payments and insurance – digital apps and services that enable consumers to pay for healthcare or insurance.
  • Patient engagement refers to digital mechanisms, such as apps, through which healthcare providers can interact with the individuals using their services.
  • Doctor networks are online services that enable clinicians to interact with each other and exchange information and advice.

Research

  • Population health management refers to the use of digital tools by clinicians to capture data about groups of patients or individuals that can then be used to inform treatment.
  • Genomics: An individual’s genetic code can be collated in a digital form so it can be used to understand their likely susceptibility specific conditions and treatments.
  • Medical big data involves capturing and analysing large volumes of data from multiple sources to help identify patterns in the progression of specific illnesses and the effectiveness of particular treatment combinations.

In-hospital care

  • Electronic medical records: A digital version of a hospital or clinic’s records of a specific patient. Unlike electronic health records, electronic medical records aren’t designed to be portable across different healthcare providers.
  • Clinical admin: The use of digital technologies to improve the efficiency of healthcare facilities.
  • Robotics: The use of digital machines to perform specific healthcare tasks, such as transporting medicines or spoon-feeding a patient.

In-home care

  • Digital medical devices: All kinds of medical devices, from thermometers to stethoscopes to glucosometers to sophisticated MRI and medical imaging equipment, are increasingly able to capture and transfer data in a digital form.
  • Remote monitoring involves the use of connected sensors to regularly capture and transmit information on a patient’s health. Such tools can be used to help monitor the condition of people with chronic diseases, such as diabetes.
  • Telehealth refers to patient-clinician consultations via a telephone, chat or video call.

The wellness opportunity

This report focuses primarily primarily on the ‘wellness’ segment (highlighted in the figure below), which is experiencing major disruption as a result of devices, apps and services being launched by Apple, Google and Microsoft, but it also touches on some of these players’ activities in other segments.

This report focuses on wellness, which is undergoing major disruption

Source: STL Partners based on categories identified by Venture Scanner

 

  • Executive summary
  • Introduction
  • High level drivers for the market
  • Market Trends and Overview
  • Market size and trends: smartwatches will overtake fitness brands
  • Health app usage has doubled in two years in the U.S.
  • Are consumers really interested in the ‘quantified self’?
  • Barriers and constraining factors for consumer digital health
  • Disruption in Consumer Digital Wellness
  • Case studies: Google, Apple and Microsoft
  • Google: leveraging Android and analytics capabilities
  • Apple: more than the Watch…
  • Microsoft: an innovative but schizophrenic approach
  • Telco Opportunities in Consumer Health
  • Recommendations for telcos

 

  • Figure 1: The different segments of the digital healthcare market
  • Figure 2: This report focuses on wellness, which is undergoing major disruption
  • Figure 3: Consumer digital health and wellness: leading products and services, 2016
  • Figure 4: Wearable Shipments by Type of Device, 2015-2020
  • Figure 5: Wearable OS Worldwide Market Share, 2015 and 2019
  • Figure 6: Take-up of different types of health apps in the U.S. market (2016)
  • Figure 7: % of health wearable and app users willing to share data US market (2016)
  • Figure 8: Elements of the ‘quantified self’, as envisioned by Orange
  • Figure 9: Less than two-third of US wearable buyers wear their acquisition long-term
  • Figure 10: Google Consumer Health and Fitness Initiatives
  • Figure 11: Snapshot of Google Fit User Interface, 2016
  • Figure 12: Google/Alphabet’s areas of focus in the digital healthcare market
  • Figure 13: Apple’s Key Digital Health and Wellness Initiatives
  • Figure 14: Apple Health app interface and dashboard
  • Figure 15: Apple’s ResearchKit-based EpiWatch App
  • Figure 16: Apple’s current areas of focus in the digital healthcare market
  • Figure 17: Microsoft Consumer Fitness/Wellness Device Initiatives
  • Figure 18: Microsoft Health can integrate data from a range of fitness trackers
  • Figure 19: Microsoft Consumer Fitness/Wellness Applications and Services
  • Figure 20: The MDLive Telehealth Proposition, August 2016
  • Figure 21: Microsoft’s areas of focus in the digital healthcare market
  • Figure 22: Telefónica’s Saluspot: Interactive online doctor consultations on-demand

Can Telcos Unlock the Value of their Consumer Data?

Summary: telcos have a significant market opportunity to act as custodians of ‘digital personas’, giving consumers the power to exploit their own data. This is an extract from a special 100 page report containing expert contributions and detailed analysis on privacy issues, legal and regulatory frameworks, technological solutions, adjacent competition, and including ‘best and next practice’ and scenario analysis, from the 1st Telco 2.0 International Summit on Consumer Data and Privacy. (Special Report, April 2010, Executive Briefing Service)

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The richness of the consumer data that flows through telco networks is far greater than anything Google has. The potential social and economic benefits from mining this ‘analytic super-food’ are enormous. What is the role of telcos in enabling this and what do they need to get right to realise the opportunity?

Telco Consumer Data is core to many new business model opportunities

Telco 2.0 has analysed a number of opportunities for telcos to develop new ‘two-sided’ or ‘platform’ business models that support B2B and B2C processes, and has set out the general theory and strategic approach in the Two-Sided Telecoms Market Opportunity Strategy Report. The use of consumer data to improve operational performance and create the ‘Personal Information Economy’ is an ongoing theme in the ‘User Data and Privacy’ research stream and will be a major theme at the 2011 Telco 2.0 Executive Brainstorms in Americas, EMEA, and APAC, and online at Best Practice Live! on 2-3 Feb.

Many of these opportunities reuse telco consumer data in some way, whether directly, e.g. to identify the consumer for the purposes of authenticating a transaction, or indirectly, using individual consumer data to build up anonymised sets of analytical infomation. Yet the diversity and complexity of the information, the consumers’ privacy needs, and patchy regulation present potential hurdles to the potential use of the data.

The Challenges of the ‘Consumer Data Explosion’

Laidler_Telco2Intro_Privacy2010%20intro%20slide.png

Source: Telco 2.0

This new 100 page Special Report analyses the provision of consumer data from telcos to other processes and parties, and assesses the key challenges of empowering change in the industry, maintaining appropriate privacy, gaining consumer trust and acceptance, and establishing viable legal and regulatory frameworks, as well as previewing potential technology solutions. It contains expert contributions and detailed analysis on the key issues, including ‘best and next practice’ and scenario analysis, from the 1st Privacy 2.0 International Summit in Boston, February 2010.

The rest of this article comprises an extract of the key findings, a Telco 2.0 analytical framework for consumer data, the detailed contents of the report, how to get it, and a special offer on this plus related analysis. You can also see a further extract of a chapter of this report in the recently published Consumer Data and Privacy 2.0: Give Customers the Power. [Ed. We will also feature more on the potential value and uses of telco consumer data at the 9th Telco 2.0 Brainsrorm in London, April 28-29, 2010.]

– Start of Report Extract –

Report Objectives

  • To identify and clarify the commercial opportunities and risks related to proactively managing consumer data, identity and privacy.
  • To understand how best to align the interests of the key stakeholder groups: consumers, merchants, legislators, tech companies, and telcos.
  • To define the parameters and next steps for the creation of a common international policy and strategy for the telecommunications industry in relation to consumer data governance.

Top Level Findings

There is shared recognition of the potential value of customers’ data, and also of the potential risks involved in attempting to monetise it inappropriately:

  • Telcos are in a great position to be the custodians of customer data in the developing ‘Digital Economy’
  • The subject is of significant interest among the world’s leading telcos with recognition that the existing ‘one-sided’ business model is reaching maturity and that ‘2-sided’ business models represents the single biggest opportunity.
  • There is also recognition (cited from recent World Economic Forum) that Telco CEOs fear a ‘3 Mile Island’ scenario, where a poor strategy or operation to tackle privacy risks openly, could destroy or retard this nascent information services opportunity for Telcos.  However, to address this, the industry should be much bolder and pro-active in advocating and trialling solutions rather than waiting for others to act.
  • The area is also being targeted by other adjacent industry players such as Google and Facebook, so there is a finite window of opportunity for Telcos. There is also a significant risk of unnecessarily restrictive regulatory intervention driven by concentrated fears of privacy abuse, if not balanced by the understanding of possible benefits to individuals, organisations and the wider economy of functional, fair and legitimate digital business.
  • Overall, while the Telecoms Industry is ‘waking up late’ to this opportunity, there is a significant imperative and growing interest, to make up for lost time – and the opportunity needs to be taken now.

(NB. The above is an extract from Report’s Executive Summary, and the following is an extract from the opening section of the report, describing an analytical framework for telco consumer data.)

The Commercial and Social Challenges of exploiting Consumer Data in the ‘Digital Economy’

Phil Laidler, Director, Telco 2.0 Initiative, presented an overall perspective on Privacy including a new descriptive and analytical Framework.

Introduction -Telecoms and customer data

Communications service providers have traditionally been very cautious about exploiting their data assets. This is partly because they have not had much need to, partly because of the technical challenges in doing so and partly down to concerns around privacy and security.

In Western Europe and to a lesser extent North America and some advanced Asia-Pac economies, telcos have reached a saturation point in core services: voice and messing revenues are stable or shrinking and set to decline further.

Although broadband services are providing new sources of revenues, these require significant capital investment and challenging returns. Furthermore, broadband access opens the door to new forms of service competition, often from players with broader commercial objectives than taking a slice of telco revenues. This only exacerbates the feared drift into becoming utility providers of “commodity bit pipe”.

Need for a new business model

New value lies in addressing the friction that exists in everyday interactions between businesses and consumers, and between governments and citizens. Typical examples include: authenticating users; market research; targeting promotions; distributing goods and content; collecting payments; and providing customer care. Today, these processes are often slow, inefficient and ineffective. They waste money and affect customer satisfaction.

Collectively, telcos have assets that can address this situation: real-time user data; secure distribution networks; sophisticated payment processing capabilities; trusted brands; a near universal subscriber base; and core voice and messaging products.

To realise a new business model opportunity based on Telco 2.0, these assets must be reorganised. A ‘two-sided’ telecoms market structure is required in which telcos facilitate improved interactions and transactions between people (‘downstream customers’) and organisations (‘upstream customers’). Telcos must continue to attract retail consumers and satisfy their needs, but in addition, they should extend the capabilities of their traditional consumer products to explicitly support enterprise business processes.

The ‘Two-Sided’ Telecoms Business Model

Laidler_Telco2Intro_Privacy2010%202sbm.png

Source: Telco 2.0 Customer Data and Privacy Report

To do this, telcos will need to create open and standardised platforms that third-party organisations can plug their enterprise IT and communications systems into, just as they plug into the telephone and internet networks today.

The Telco 2.0 Initiative estimates this opportunity could be worth $375bn of new revenue to telcos in 10 years’ time, equivalent to around 20% of total telecoms revenues at that time in mature markets alone. The value to the wider digital economy – industry and consumers – will be many times greater.

There is a sense of urgency. This revenue is not guaranteed and large-scale ‘over the top’ players are also interested in capturing value by re-engineering the value chains of other industries – witness what Google has done with the advertising industry. Operators cannot afford to sit and wait. They must act soon if this opportunity is not to pass them by and this means co-ordinated, cross-industry collaboration to develop the market opportunity. Failure to do this will lead to inevitable decline.

The situation – Personal data explosion

The advent of the digital economy has led to massive growth in the volume of data generated, captured and stored. This is partly because – in more advanced economies at least – we conduct so much more of our life through digital media: work, play, buy, sell, learn, opine, meet, bank, watch, vote, give, protect. It is also because there are many more connected devices to generate and retrieve data, much of it automatically. Finally, the cost of transmitting, storing and then extracting meaning from all this data has fallen dramatically and is set to continue falling according to Nielsen’s, Kryder’s and Moore’s Laws respectively.

Consumers and authorities struggle to keep up with the pace of change. Much regulation is an uneven patchwork of sector and geographic rules and policy. Consumers scroll down to click on “I agree” with routine abandon. For most, the practical reality of “notice and consent” is that it achieves neither. This represents a new potential role for telcos.

Telco data: Buried gold

Telecoms operators process vast quantities of data related to their users

Critically, telcos are in a relatively good position to authenticate user identities. Furthermore, they can draw on multiple & rich levels of data to provide increasingly rigorous levels of authentication process. This is key as it provides so much of a secure basis for undertaking other processes.

Very few elements of data held by telcos are unique and most of these are losing their uniqueness (e.g. location). Furthermore, telco data sets are not as complete or accurate as they could be. However, taken together, telcos have an exceptional broad base of data which can be added-to and refined to support a plethora of third-party services.

Telcos have a unique relationship with the consumer and hold the key to helping consumers, organizations and enterprises in all sectors take advantage of the ‘analytic super-food’ flowing across their networks. There is a significant commercial opportunity for telcos to act as trusted guardians of this data, but also significant risks.

Other potential future custodians of our digital personae are retail financial institutions, internet players (Google, Facebook), device manufacturers (Apple, Nokia) and Government. There may be some surprises from unexpected quarters (e.g. credit rating agencies). To succeed they will need to build trust, and deliver value and convenience to customers.

Telco Consumer Data Map

                       Laidler_Telco2Intro_Privacy2010%20data%20image.png

Source: Telco 2.0 Customer Data and Privacy Report

Making sense of personal data

In seeking to drive the debate for the 1st Privacy 2.0 International Summit in Boston, we have attempted to map out potential consumer data activities along two dimensions: how the data was obtained; and how it was used.

Telco 2.0’s Consumer Data Analysis Framework

Laidler_Telco2Intro_Privacy2010%20Framework.png

Source: Telco 2.0 Customer Data and Privacy Report

Based on categorisation presented at the Telco 2.0 brainstorm in Orlando last year, by Marc Davis of Invention Arts, we have split the sources of personal data into 3 groups: declared by customers, observed, and inferred. This last group includes many lifestyle characteristics, interests, tastes, communication and relationship preferences, attitudes, beliefs and behavioural patterns.

We then consider how the data is used and have split this into four groups: internally by the entity collecting the data; externally for services that do not actually share the data, but make use of it for supporting third party organizations (Google search is an example of this); externally as aggregate, anonymised data that cannot be attributed to an individual; and sharing PII data externally with third parties.

Any given organization looking to exploit customer data will operate across this map at different points in the customer lifecycle, for different business processes and in different ways. They will also operate with varying degrees of customer awareness and varying degrees of implicit or explicit accord. Building consensus across telcos on where and how the industry should operate will be key to meeting the industry’s aspirations.

By using this framework, we hope to bring clarity and understanding to the debate and help to answer the key questions that the conference is looking to address:

  • How can the industry profitably enable upstream players to benefit from consumers’ data that we hold, while still effectively empowering consumers to share/trade their data in an informed, “safe” and “fair” manner?
  • What do we do in each area of the data map, how do we need to do it, both individually and collectively.
– End of Report Extract –

Report Contents

  • The Commercial and Social Challenges of exploiting Consumer Data in the ‘Digital Economy’
  • The framework for Analysing Consumer Data and its uses
  • Stakeholder Problem Statements
  • Understanding the ‘Consumer’ – highlights of global consumer research and eTrust Framework
  • Examples of current ‘Best Practice’ in key areas: Online Identity Management, Regulation and Behavioural Advertising, Google and Disruption, Mobile Data Analytics
  • Examples of ‘Next Practice’: Supporting the ‘Currency’ of the Information Economy, Enabling Multiple IDs, Personal ID Management, Privacy By Design
  • Participant Survey – Challenges and Barriers
  • Moving Forward – Future Scenarios
  • Moving forwards – towards an International Policy and Commercial Strategy
  • Brainstorm responses for scenario 1 – Telco Trustmark
  • Brainstorm responses for scenario 2 – Let the Market Decide
  • Brainstorm responses Scenario X – Telcos do not participate
  • Panel Review of Proposals
  • Next Steps for the telco industry, organizations & individuals
  • Appendix 1 – Group Brainstorm Outputs
  • Appendix 2 – Summit Agenda

To Get the Report

Members of the Telco 2.0 Executive Briefing Subscription Service and the Telco 2.0 Transformation Stream can download the full 100 page report in PDF format here. Non-Members, please see here for how to subscribe, here to buy a single user license for for £995, and here to buy a license for up to 5 people for £1,450. Corporate-wide licenses are also available – please email contact@telco2.net or call +44 (0) 207 247 5003.

[NB There will be more on the value and uses of consumer data at the 9th Telco 2.0 Brainsrorm in London, April 28-29, 2010.]

Special Offer

We reommend that non-member readers looking for a comprehensive overview of new Telco Business Models enabling advertising and marketing also consider the Telco 2.0 Briefing report Mobile Advertising and Marketing: Text-based Local Search Use Case and the special report  Mobile Advertising and Marketing: Operator and Market Growth Strategies 2010. Each report is available individually for single, group and corporate users, and a also in a package of all three reports at a 33% discount – £1,900 for a single user and £2,900 for all three reports for 5 users. Please email contact@telco2.net or call +44 (0) 207 247 5003 for more on these packages and interest in corporate-wide licenses.