How video analytics can kickstart the edge opportunity for telcos

Processing video is a key use for edge computing

In our analysis and sizing of the edge market, STL Partners found that processing video will be a strong driver of edge capacity and revenues. This is because a huge quantity of visual data is captured each day through many different processes. The majority of the information captured is straightforward (such as “how busy is this road?”), therefore it is highly inefficient for the whole data stream to be sent to the core of the network. It is much better to process it near to the point of origin and save the costs, energy and time of sending it back and forth. Hence “Video Analytics” is a key use for edge computing.

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The edge market is evolving rapidly

Edge computing is an exciting opportunity. The market is evolving rapidly, and although still fairly nascent today, is expected to scale significantly over the next 2-3 years. STL partners has estimated that the total edge computing addressable market was worth $10bn in 2020, and that this will grow to $534bn in 2030. This is driven by the increasing number of connected devices, and the rising adoption of IoT, Industry 4.0 and digital transformation solutions. While cloud adoption continues to grow in parallel, there are cases where the increasingly stringent connectivity demands of new and advanced use cases cannot be met by cloud or central data centres, or where sending data to the cloud is too costly. Edge answers this problem, and offers an alternative option with lower latency, reduced backhaul and greater reliability. For the many enterprises who are adopting a hybrid and multi-cloud strategy – strategically distributing their data across different clouds and locations – running workloads at the edge is a natural next step.

Developments in the technologies enabling edge computing are also contributing to market growth. For example, the increased agility of virtualised and 5G networks enables the migration of workloads from the cloud to the edge. Compute is also developing, becoming more lightweight, efficient, and powerful. These more capable devices can run workloads and perform operations that were not previously possible at the edge.

Defining different types of edge

Edge computing brings processing capabilities closer to the end user or end-device. The compute infrastructure is therefore more distributed, and typically at smaller sites. This differs from traditional on-premise compute (which is monolithic or based on proprietary hardware) because it utilises the flexibility and openness of cloud native infrastructure, i.e. highly scalable Kubernetes clusters.

The location of the edge may be defined as anywhere between an end device, and a point on the periphery of the core network. We have outlined the key types of edge computing and where they are located in the figure below.

The types of edge computing

It should be noted that although moving compute to the edge can be considered an alternative to cloud, edge computing also complements cloud computing and drives adoption, since data that is processed or filtered at the edge can ultimately be sent to the cloud for longer term storage or collation and analysis.

Telcos must identify which area of the edge market to focus on

For operators looking to move beyond connectivity and offer vertical solutions, edge is an opportunity to differentiate by incorporating their edge capabilities into solutions. If successful, this could result in significant revenue generation, since the applications and platforms layer is where most of the revenue from edge resides. In fact, by 2030, 70% of the addressable revenue for edge will come from the application, with only 9% in the pure connectivity. The remaining 21% represents the value of hardware, edge infrastructure and platforms, integration, and managed services.

Realistically, operators will not have the resource and management bandwidth to develop solutions for several use cases and verticals. They must therefore focus on key customers in one or two segments, understand their particular business needs, and deliver that value in concert with specific partners in their ecosystem. As it relates to MEC, most operators are selecting the key partners for each of the services they offer – broadcast video, immersive AR/VR experiences, crowd analytics, gaming etc.

When selecting the best area to focus on, telcos should weigh up the attractiveness of the market (including the size of the opportunity, how mature the opportunity is, and the need for edge) against their ability to compete.

Value of edge use cases (by size of total addressable market by 2030)

Source: STL Partners – Edge computing market sizing forecast

We assessed the market attractiveness of the top use cases that are expected to drive adoption of edge over the coming years, some of which are shown in the figure above. This revealed that the use cases that represent the largest opportunities in 2030 include edge CDN, cloud gaming, connected car driver assistance and video analytics. Of these, video analytics is the most mature opportunity, therefore represents a highly attractive proposition for CSPs.

Table of Contents

  • Executive Summary
  • Introduction
    • Processing video is a key use for edge computing
    • The edge market is evolving rapidly
    • Defining different types of edge
    • Telcos must identify which area of the edge market to focus on
  • Video analytics is a large and growing market
    • The market for edge-enabled video analytics will be worth $75bn by 2030
  • Edge computing changes the game and plays to operator strengths
    • What is the role of 5G?
  • Security is the largest growth area and operators have skills and assets in this
    • Video analytics for security will increasingly rely on the network edge
  • There is empirical evidence from early movers that telcos can be successful in this space
    • What are telcos doing today?
    • Telcos can front end-to-end video analytics solutions
    • It is important to maintain openness
    • Conquering the video analytics opportunity will open doors for telcos
  • Conclusion
  • Index

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Voice 2.0: RCS-e – the next generation of communications services (Vodafone/Deutsche Telekom Presentation)

Voice & Messaging 2.0: RCS-e, the new generation of communications services?,
Presentation by Cenk Serdar, Director, Data and Communications Services, Vodafone Group, and Rainer Deutschmann, SVP Core Telco Products, Deutsche Telekom. Is RCS-e our future? And if so, what kind of future? Presented at EMEA Brainstorm, November 2011.
Strategic options for telcos - resisting the disruptors in voice

Download presentation here.

Links here for more on New Digital Economics brainstorms and Voice 2.0 research, or call +44 (0) 207 247 5003.

Example slide from the presentation:

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.

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: Nokia’s Strange Services Strategy – Lessons from Apple iPhone and RIM

The profuse proliferation of poorly integrated projects suggests either – if we’re being charitable – a deliberate policy of experimenting with many different ideas, or else – if we’re not – the absence of a coherent strategy.

Clearly Nokia is aware of the secular tendency in all information technology fields that value migrates towards software and specifically towards applications. Equally clearly, they have the money, scale, and competence to deliver major projects in this field. However, so far they have failed to make services into a meaningful line of business, and even the well developed software ecosystem hasn’t seen a major hit like the iPhone and its associated app store.

Nokia Services: project proliferator

So far, the Services division in its various incarnations has brought forward Club Nokia, the Nokia Game, Forum Nokia, Symbian Developer Network, WidSets, Nokia Download!, MOSH, Nokia Comes With Music, Nokia Music Store, N-Gage, Ovi, Mail on Ovi, Contacts on Ovi, Ovi Store…it’s a lot of brands for one company, and that’s not even an exhaustive list. They’ve further acquired Intellisync,, Loudeye, Twango, Enpocket, Oz Communications, Gate5, Starfish Software, Navteq and Avvenu since 2005 – that makes an average of just over two services acquisitions a year. Further, despite the decision to integrate all (or most) services into Ovi, there are still five different functional silos inside the Services division.

The great bulk of applications or services available or proposed for mobile devices fall into two categories – social or media. Under social we’re grouping anything that is primarily about communications; under media we’re grouping video, music, games, and content in general. Obviously there is a significant overlap. This is driven by fundamentals; no-one is likely to want to do computationally intensive graphics editing, CAD, or heavy data analysis on a mobile, run a database server on one, or play high-grade full-3D games. Batteries, CPU limitations, and most of all, form factor limitations see to that. And on the other side, communication is a fundamental human need, so there is demand pull as well as constraint push. As we pointed out back in the autumn of 2007, communication, not content, is king.


In trying to get user adoption of its applications and services, Nokia is pursuing two aims – one is to create products that will help to ship more Nokia devices, and to ship higher-value N- or E- series devices rather than featurephones, and the other is a longer-range hope to create a new business in its own right, which will probably be monetised through subscriptions, advertising,or transactions. This latter aim is much further off that the first, and is affected by the operators’ suspicion of any activity that seems to rival their treasured billing relationship. For example, although quick signup and data import are crucial to deploying a social application, Nokia probably wouldn’t get away with automatically enrolling all users in its services – the operators likely wouldn’t wear it.

Historical lessons

There have been several historical examples of similar business models, in which sales of devices are driven by a social network. However, the common factor is that success has always come from facilitating existing social networks rather than trying to create new ones. This is also true of the networks themselves; if new ones emerge, it’s usually as an epi-phenomenon of generally reduced friction. Some examples:

  1. Telephony itself: nobody subscribed in order to join the telephone community, they subscribed to talk to the people they wanted to talk to anyway.
  2. GSM: the unique selling point was that the people who might want to talk to you could reach you anywhere, and PSTN interworking was crucial.
  3. RIM’s BlackBerry: early BlackBerries weren’t that impressive as such, but they provided access to the social value of your e-mail workflow and groupware anywhere. Remember, the only really valuable IM user base is the 17 million Lotus Notes Sametime users.
  4. 3’s INQ: the Global Mobile Award-winning handset is really a hardware representation of the user’s virtual presence . Hutchison isn’t interested in trying to make people join Club Hutch or use 3Book; they’re interested in helping their users manage their social networks and charging for the privilege.

So it’s unlikely that trying to recruit users into Nokia-specific communities is at all sensible. Nobody likes vendor lock-in. And, if your product is really good, why restrict it to Nokia hardware users? As far as Web applications go, of course, there’s absolutely no reason why other devices shouldn’t be allowed to play. But this fundamental issue – that no-one organises their lives around their friends’ or the friends’ mobile operators’ choices of device vendor – would tend to explain why there have been so many service launches, mergers, and shutdowns. Nokia is trying to find the answer by trial and error, but it’s looking in the wrong place. There is some evidence, however, that they are looking more at facilitating other social applications, but this is subject to negotiation with the operators.

The operator relationship – root of the problem

One of the reasons why is the conflict with operators mentioned above. Nokia’s efforts to build a Nokia-only community mirror the telco fascination with the billing relationship. Telcos tend to imagine that being a customer of Telco X is enough to constitute a substantial social and emotional link; Nokia is apparently working on the assumption that being a customer of Nokia is sufficient to make you more like other Nokia customers than everyone else. So both parties are trying to “own the customer”, when in fact this is probably pointless, and they are succeeding in spoiling each others’ plans. Although telcos like to imagine they have a unique relationship with their subscribers, they in fact know surprisingly little about them, and carriers tend to be very unpopular with the public. Who wants to have a relationship with the Big Expensive Phone Company anyway? Both parties need to rethink their approach to sociability.

What would a Telco 2.0 take on this look like?

First of all, the operator needs to realise that the subscribers don’t love them for themselves; it was the connectivity they were after all along! Tears! Secondly, Nokia needs to drop the fantasy of recruiting users into a vendor-specific Nokiasphere. It won’t work. Instead, both ought to be looking at how they can contribute to other people’s processes. If Nokia can come up with a better service offering, very well – let them use the telco API suite. In fact, perhaps the model should be flipped, and instead of telcos marketing Nokia devices as a bundled add-in with their service, Nokia ought to be marketing its devices (and services) with connectivity and much else bundled into the upfront price, with the telcos getting their share through richer wholesale mechanisms and platform services.

Consider the iPhone. Looking aside from the industrial design and GUI for a moment – I dare you! you can do it! – its key features were integration with iTunes (i.e. with content), a developer platform that offered good APIs and documentation, but also a route to market for the developers and an easy way for users to discover, buy, and install their products, and an internal business model that sweetened the deal for the operators, by offering them exclusivity and a share of the revenue. Everyone still loves the iPhone, everyone still hates AT&T, but would AT&T ever consider not renewing the contract with Apple? They’re stealing our customers’ hearts! Of course not.

Apple succeeded in improving the following processes for two out of three key customer groups:

  1. Users: Acquiring and managing music and video across multiple devices.
  2. Users: Discovering, installing, and sharing mobile applications
  3. Developers: Deploying and selling mobile applications

And as two-sidedness would suggest, they offered the remaining group a share of revenue. The rest is history; the iPhone has become the main driver of growth and profitability at Apple, more than one billion applications downloads have been shipped from the App Store, etc, etc.

Conclusions: turn to small business?

So far, however, Nokia’s approach has mirrored the worst aspects of telcos’ attitude to their subscribers; a combination of possessiveness and indifference. They want to own the customer; they don’t know how or why. It might be more defensible if there was any sign that Nokia is serious about making money from services; that, of course, is poison to the operators and is therefore permanently delayed. Similarly, Nokia would like to have the sort of brand loyalty Apple enjoys and to build the sort of integrated user experience Apple specialises in, but it is paranoid about the operators. The result is essentially an Apple strategy, but not quite.

What else could they try? Consider Nokia Life Tools, the package of information services for farmers and small businesses they are building for the developing world. One thing that Nokia’s services strategy has so far lacked is engagement with enterprises; it’s all been about swapping photos and music and status updates. Although Nokia makes great business-class gadgets, and they provide a lot of useful enablers (multiple e-mail boxes, support for different push e-mail systems, VPN clients, screen output, printer support), there’s a hole shaped like work in their services offering. RIM has been much better here, working together with IBM and to expand the range of enterprise applications they can mobilise.

Life Tools, however, shows a possible opportunity – it’s all right catering to companies who already have complex workflow systems, but who’s serving the ones that don’t have the scale to invest there? None of the vendors are addressing this, and neither are the telcos. It fits a whole succession of Telco 2.0 principles – focus on enterprises, look for areas where there’s a big difference between the value of bits and their quantity, and work hard at improving wholesale.

It’s almost certainly a better idea than trying to be Apple, but not quite.

Next Steps for Nokia and telcos

  • It is unlikely that ”Nokia users” are a valid community

  • Really successful social hardware facilitates existing social networks

  • Nokia’s problems are significantly explained by their difficult relationship with operators

  • Nokia’s emerging-market Life Tools package might be more of an example than they think

  • A Telco 2.0 approach would emphasise small businesses, offer bundled connectivity, and deal with the operators through better wholesale