Consumer strategy: What should telcos do?

Globally, telcos are pursuing a wide variety of strategies in the consumer market, ranging from broad competition with the major Internet platforms to a narrow focus on delivering connectivity.

Some telcos, such as Orange France, Telefónica Spain, Reliance Jio and Rakuten Mobile, are combining connectivity with an array of services, such as messaging, entertainment, smart home, financial services and digital health propositions. Others, such as Three UK, focus almost entirely on delivering connectivity, while many sit somewhere in between, targeting a single vertical market, in addition to connectivity. AT&T is entertainment-orientated, while Safaricom is financial services-focused.

This report analyses the consumer strategies of the leading telcos in the UK and the Brazil – two very different markets. Whereas the UK is a densely populated, English-speaking country, Brazil has a highly-dispersed population that speaks Portuguese, making the barriers to entry higher for multinational telecoms and content companies.

By examining these two telecoms markets in detail, this report will consider which of these strategies is working, looking, in particular, at whether a halfway-house approach can be successful, given the economies of scope available to companies, such as Amazon and Google, that offer consumers a broad range of digital services. It also considers whether telcos need to be vertically-integrated in the consumer market to be successful. Or can they rely heavily on partnerships with third-parties? Do they need their own distinctive service layer developed in-house?

In light of the behavourial changes brought about by the pandemic, the report also considers whether telcos should be revamping their consumer propositions so that they are more focused on the provision of ultra-reliable connectivity, so people can be sure to work from home productively. Is residential connectivity really a commodity or can telcos now charge a premium for services that ensure a home office is reliably and securely connected throughout the day?

A future STL Partners report will explore telcos’ new working from home propositions in further detail.

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The UK market: Convergence is king

The UK is one of the most developed and competitive telecoms markets in the world. It has a high population density, with 84% of its 66 million people living in urban areas, according to the CIA Factbook. There are almost 272 people for every square kilometre, compared with an average of 103 across Europe. For every 100 people, there are 48 fixed lines and 41 broadband connections, while the vast majority of adults have a mobile phone. GDP per capita (on a purchasing power parity basis) is US$ 48,710, compared with US$ 65,118 in the US (according to the World Bank).

The strength of the state-funded public service broadcaster, the BBC, has made it harder for private sector players to make money in the content market. The BBC delivers a large amount of high-quality advertising-free content to anyone in the UK who pays the annual license fee, which is compulsory to watch television.

In the UK, the leading telcos have mostly eschewed expansion into the broader digital services market. That reflects the strong position of the leading global Internet platforms in the UK, as well as the quality of free-to-air television, and the highly competitive nature of the UK telecoms market – UK operators have relatively low margins, giving them little leeway to invest in the development of other digital services.

Figure 1 summarises where the five main network operators (and broadband/TV provider Sky) are positioned on a matrix mapping degree of vertical integration against the breadth of the proposition.

Most UK telcos have focused on the provision of connectivity

UK telco B2C strategies

Source: STL Partners

Brazil: Land of new opportunities

Almost as large as the US, Brazil has a population density is just 25 people per square kilometre – one tenth of the total UK average population density. Although 87% of Brazil’s 212 million people live in urban areas, according to the CIA Fact book, that means almost 28 million people are spread across the country’s rural communities.

By European standards, Brazil’s fixed-line infrastructure is relatively sparse. For every 100 people, Brazil has 16 fixed lines, 15 fixed broadband connections and 99 mobile connections. Its GDP per capita (on a purchasing power parity basis) is US$ 15,259 – about one third of that in the UK. About 70% of adults had a bank account in 2017, according to the latest World Bank data. However, only 58% of the adult population were actively using the account.

A vast middle-income country, Brazil has a very different telecoms market to that of the UK. In particular, network coverage and quality continue to be important purchasing criteria for consumers in many parts of the country. As a result, Oi, one of the four main network operators, became uncompetitive and entered a bankruptcy restructuring process in 2016. It is now hoping to to sell its sub-scale mobile unit for at least 15 billion reais (US$ 2.8 billion) to refocus the company on its fibre network. The other three major telcos, Vivo (part of Telefónica), Claro (part of América Móvil) and TIM Brazil, have made a joint bid to buy its mobile assets.

For this trio, opportunities may be opening up. They could, for example, play a key role in making financial services available across Brazil’s sprawling landmass, much of which is still served by inadequate road and rail infrastructure. If they can help Brazil’s increasingly cash-strapped consumers to save time and money, they will likely prosper. Even before COVID-19 struck, Brazil was struggling with the fall-out from an early economic crisis.

At the same time, Brazil’s home entertainment market is in a major state of flux. Demand for pay television, in particular, is falling away, as consumers seek out cheaper Internet-based streaming options.

All of Brazil’s major telcos are building a broad consumer play

Brazil telco consumer market strategy overview

Source: STL Partners

Table of contents

  • Executive Summary
  • Introduction
    • The UK market: Convergence is king
    • BT: Trying to be broad and deep
    • Virgin Media: An aggregation play
    • O2 UK: Changing course again
    • Vodafone: A belated convergence play
    • Three UK: Small and focused
    • Takeaways from the UK market: Triple play gridlock
  • Brazil: Land of new opportunities
    • The Brazilian mobile market
    • The Brazilian fixed-line market
    • The Brazilian pay TV market
    • The travails of Oi
    • Vivo: Playing catch-up in fibre
    • Telefónica’s financial performance
    • América Móvil goes broad in Brazil
    • TIM: Small, but perfectly formed?
    • Takeaways from the Brazilian market: A potentially treacherous transition
  • Index

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Mobile app latency in Europe: French operators lead; Italian & Spanish lag

Latency as a proxy for customer app experience

Latency is a measure of the time taken for a packet of data to travel from one designated point to another. The complication comes in defining the start and end point. For an operator seeking to measure its network latency, it might measure only the transmission time across its network.

However, to objectively measure customer app experience, it is better to measure the time it takes from the moment the user takes an action, such as pressing a button on a mobile device, to receiving a response – in effect, a packet arriving back and being processed by the application at the device.

This ‘total roundtrip latency’ time is what is measured by our partner, Crittercism, via embedded code within applications themselves on an aggregated and anonymised basis. Put simply, total roundtrip latency is the best measure of customer experience because it encompasses the total ‘wait time’ for a customer, not just a portion of the multi-stage journey

Latency is becoming increasingly important

Broadband speeds tend to attract most attention in the press and in operator advertising, and speed does of course impact downloads and streaming experiences. But total roundtrip latency has a bigger impact on many user digital experiences than speed. This is because of the way that applications are built.

In modern Web applications, the business logic is parcelled-out into independent ‘microservices’ and their responses re-assembled by the client to produce the overall digital user experience. Each HTTP request is often quite small, although an overall onscreen action can be composed of a number of requests of varying sizes so broadband speed is often less of a factor than latency – the time to send and receive each request. See Appendix 2: Why latency is important, for a more detailed explanation of why latency is such an important driver of customer app experience.

The value of using actual application latency data

As we have already explained, STL Partners prefers to use total roundtrip latency as an indicator of customer app experience as it measures the time that a customer waits for a response following an action. STL Partners believes that Crittercism data reflects actual usage in each market because it operates within apps – in hundreds of thousands of apps that people use in the Apple App Store and in Google Play. This is a quite different approach to other players which require users to download a specific app which then ‘pings’ a server and awaits a response. This latter approach has a couple of limitations:

1. Although there have been several million downloads of the OpenSignal and Actual Experience app, this doesn’t get anywhere near the number of people that have downloaded apps containing the Crittercism measurement code.

2. Because the Crittercism code is embedded within apps, it directly measures the latency experienced by users when using those apps1. A dedicated measurement app fails to do this. It could be argued that a dedicated app gives the ‘cleanest’ app reading – it isn’t affected by variations in app design, for example. This is true but STL Partners believes that by aggregating the data for apps such variation is removed and a representative picture of total roundtrip latency revealed. Crittercism data can also show more granular data. For example, although we haven’t shown it in this report, Crittercism data can show latency performance by application type – e.g. Entertainment, Shopping, and so forth – based on the categorisation of apps used by Google and Apple in their app stores.

A key premise of this analysis is that, because operators’ customer bases are similar within and across markets, the profile of app usage (and therefore latency) is similar from one operator to the next. The latency differences between operators are, therefore, down to the performance of the operator.

Why it isn’t enough to measure average latency

It is often said that averages hide disparities in data, and this is particularly true for latency and for customer experience. This is best illustrated with an example. In Figure 2 we show the distribution of latencies for two operators. Operator A has lots of very fast requests and a long tail of requests with high latencies.

Operator B has much fewer fast requests but a much shorter tail of poor-performing latencies. The chart clearly shows that operator B has a much higher percentage of requests with a satisfactory latency even though its average latency performance is lower than operator A (318ms vs 314ms). Essentially operator A is let down by its slowest requests – those that prevent an application from completing a task for a customer.

This is why in this report we focus on average latency AND, critically, on the percentage of requests that are deemed ‘unsatisfactory’ from a customer experience perspective.

Using latency as a measure of performance for customers

500ms as a key performance cut-off

‘Good’ roundtrip latency is somewhat subjective and there is evidence that experience declines in a linear fashion as latency increases – people incrementally drop off the site. However, we have picked 500ms (or half a second) as a measure of unsatisfactory performance as we believe that a delay of more than this is likely to impact mobile users negatively (expectations on the ‘fixed’ internet are higher). User interface research from as far back as 19682 suggests that anything below 100ms is perceived as “instant”, although more recent work3 on gamers suggests that even lower is usually better, and delay starts to become intrusive after 200-300ms. Google experiments from 20094 suggest that a lasting effect – users continued to see the site as “slow” for several weeks – kicked in above 400ms.

Percentage of app requests with total roundtrip latency above 500ms – markets

Five key markets in Europe: France, Germany, Italy, and the UK.

This first report looks at five key markets in Europe: France, Germany, Italy, and the UK. We explore performance overall for Europe by comparing the relative performance of each country and then dive into the performance of operators within each country.

We intend to publish other reports in this series, looking at performance in other regions – North America, the Middle East and Asia, for example. This first report is intended to provider a ‘taster’ to readers, and STL Partners would like feedback on additional insight that readers would welcome, such as latency performance by:

  • Operating system – Android vs Apple
  • Specific device – e.g. Samsung S6 vs iPhone 6
  • App category – e.g. shopping, games, etc.
  • Specific countries
  • Historical trends

Based on this feedback, STL Partners and Crittercism will explore whether it is valuable to provide specific total roundtrip latency measurement products.


  • Latency as a proxy for customer app experience
  • ‘Total roundtrip latency’ is the best measure for customer ‘app experience’
  • Latency is becoming increasingly important
  • STL Partners’ approach
  • Europe: UK, Germany, France, Italy, Spain
  • Quantitative Analysis
  • Key findings
  • UK: EE, O2, Vodafone, 3
  • Quantitative Analysis
  • Key findings
  • Germany: T-Mobile, Vodafone, e-Plus, O2
  • Quantitative Analysis
  • Key findings
  • France: Orange, SFR, Bouygues Télécom, Free
  • Quantitative Analysis
  • Key findings
  • Italy: TIM, Vodafone, Wind, 3
  • Quantitative Analysis
  • Key findings
  • Spain: Movistar, Vodafone, Orange, Yoigo
  • Quantitative Analysis
  • Key findings
  • About STL Partners and Telco 2.0
  • About Crittercism
  • Appendix 1: Defining latency
  • Appendix 2: Why latency is important


  • Figure 1: Total roundtrip latency – reflecting a user’s ‘wait time’
  • Figure 2: Why a worse average latency can result in higher customer satisfaction
  • Figure 3: Major European markets – average total roundtrip latency (ms)
  • Figure 4: Major European markets – percentage of requests above 500ms
  • Figure 5: The location of Google and Amazon’s European data centres favours operators in France, UK and Germany
  • Figure 6: European operators – average total roundtrip latency (ms)
  • Figure 7: European operators – percentage of requests with latency over 500ms
  • Figure 8: Customer app experience is likely to be particularly poor at 3 Italy, Movistar (Spain) and Telecom Italia
  • Figure 9: UK Operators – average latency (ms)
  • Figure 10: UK operators – percentage of requests with latency over 500ms
  • Figure 11: German Operators – average latency (ms)
  • Figure 12: German operators – percentage of requests with latency over 500ms
  • Figure 13: French Operators – average latency (ms)
  • Figure 14: French operators – percentage of requests with latency over 500ms
  • Figure 15: Italian Operators – average latency (ms)
  • Figure 16: Italian operators – percentage of requests with latency over 500ms
  • Figure 17: Spanish Operators – average latency (ms)
  • Figure 18: Spanish operators – percentage of requests with latency over 500ms
  • Figure 19: Breakdown of HTTP requests in, by type and size

Telco 2.0: how to accelerate the implementation of new business models

Summary: Opportunities exist for operators to support third-party businesses in Customer Profiling, Marketing offers, ID & Authentication, Network QoS, and Billing, Payments & Collection. However, our in-depth research among senior execs in ‘upstream’ industries (e.g. retail, media, IT, etc.) and telcos shows that poor communication of the telecoms value proposition and slow implementation by operators is frustrating upstream customers and operators alike. Our new analysis identifies strategic customer segments for telcos building new ‘Telco 2.0’ business models, key obstacles to overcome, six real-world implementation strategy scenarios, and strategic recommendations for telcos. (March 2012, Executive Briefing Service, Transformation Stream.) Google's Advertising Revenues Cascade


  • Below is an extract from this 29 page report, kindly commissioned and sponsored by Openet and independently produced by Telco 2.0. Openet developed the initial research concept and scope. The research, analysis and the writing of the report itself was carried out independently by STL Partners.
  • Members of the Telco 2.0 Executive Briefing service can download this report in full in PDF format here.
  • Alternatively, to download this report for free, join our Foundation 2.0 service (details here) by using the promotional code FOUNDATION2 in the box at the bottom of the sign-up page here. Once registered, you will be able to download the report here.
  • We’ll also be discussing our findings at the EMEA Executive Brainstorm in London (12-13 June, 2012).
  • To access reports from the full Telco 2.0 Executive Briefing service, to submit whitepapers for review for inclusion in this service, or to find out more about our services please email or call +44 (0) 207 247 5003.


This research has been designed to explore how valuable new telecoms solutions could be for third-party companies (a key part of Telco 2.0), as well as to evaluate the barriers to effective implementation. Third-parties (upstream customers) and operators were interviewed to explore their thoughts in this key strategic area for the telecommunications industry.

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Executive Summary

Headline Conclusions

  • Opportunities exist for operators to support third-party businesses in Customer Profiling, Marketing offers, ID & Authentication, Network QoS, and Billing, Payments & Collection.
  • Poor communication of the telecoms value proposition and slow implementation by operators is frustrating upstream customers and managers within operators themselves.
  • There are four upstream customer segments. Two of these are particularly important for the operators to address when developing go-to-market approaches:
  • Enthusiasts who need full-service Telco 2.0 solutions now;
  • Non-believers who need to be educated on the value of telecoms enabling services and convinced of operators’ ability to implement.
  • There are few material barriers to developing solutions except operators’ inability to implement effectively:
  • Although lack of cross-operator solutions and regulatory impediments are considered significant in Europe and the US.
  • There are four key reasons for the slow implementation by operators:
  • Reason 1: Insufficient investment by operators in services and service enabler platforms.
  • Reason 2: Financial metrics which do not encourage investment in new business models.
  • Reason 3: Inability to pin down the optimal timing for investment in new business models.
  • Reason 4: A prisoners’ dilemma over whether to collaborate or compete with other operators and with upstream customers when implementing solutions.

For the complete recommendations, detailed conclusions and full analysis, please download the report by following the instructions at the top of this page.


Introduction, Objectives and Methodology

The research consisted of interviews with 26 major corporations that use telecoms networks to deliver services to consumers including players from advertising, media, financial services and retail (upstream customers or ‘third-party’ companies). Interviewees where senior managers who were responsible for the provision of services via digital channels and thus were familiar with the challenges and opportunities they faced in this developing market segment. Additionally, STL Partners interviewed senior managers from 16 major mobile and converged communications service providers (see Figure 1 below for more details on participants).

The objectives of the research were to determine:

  • What Telco 2.0 (enabling) services would upstream customers like to see from communications service providers?
  • What are the most common use cases and attractive commercial models for such services?
  • What are the current barriers to realising the Telco 2.0 opportunity and what needs to be done to overcome these barriers?

Figure 1: Interviews conducted with players from telecoms and adjacent industries

Companies interviewed for this report

Source: STL Partners

Interviews were 30-60 minutes in length and largely qualitative in nature. Some quantitative questions were asked so that the relative attractiveness of Telco 2.0 solution areas and the size of implementation barriers could be evaluated. The interviews were also designed to uncover differences in perspective between:

  • Operators and upstream customers;
  • Upstream customers from different industry groups – Advertising, Media, Financial services and IT;
  • Operators from different geographic regions – Europe, North America, Middle East and North Africa (MENA) and Asia Pacific (APAC).

Interviews were conducted with senior decision-makers and influencers and, to ensure discussions were full and frank, the content of interviews has not been attributed to individual companies.

Report Contents

  • Introduction
  • Real potential value in Telco assets but implementation proving difficult
  • Defining the opportunity areas
  • Strong overall alignment across all eight areas between operators and upstream customers
  • Averages hide variations in upstream customer responses
  • Operators consistent about opportunities apart from Identity & Authentication solutions
  • Telco ability to implement is seen by all as the key barrier…
  • …although operators in Europe and US also see lack of cross-operator solutions and regulation as key barriers
  • Four upstream customer segments require different solutions from operators
  • Operator segment mix looks very different to upstream
  • Why are operators finding implementing Telco 2.0 so hard?
  • Reason1: Insufficient investment by operators in services and service enabler platforms
  • Reason 2: Financial metrics which do not encourage investment in new business models
  • Reason 3: Inability to pin down the optimal timing for investment in new business models
  • Reason 4: A prisoners’ dilemma over whether to collaborate or compete with other operators and with upstream customers when implementing solutions
  • Conclusions and recommendations

Report Figures

  • Figure 1: Interviews conducted with players from telecoms and adjacent industries
  • Figure 2: Broad alignment on opportunity areas from operators & upstream customers
  • Figure 3: Upstream customers – variation even within industry sectors for specific Telco 2.0 solution areas
  • Figure 4: Perceived lack of telco interest in developing new solutions for upstream customers
  • Figure 5: Regional differences in operator opportunity sizing for Identity & Authentication solutions
  • Figure 6: Telco operational and organisation limitations seen as the biggest barrier to success
  • Figure 7: Regional differences in perception of key barriers to Telco 2.0 implementation
  • Figure 8: Upstream customer segments
  • Figure 9: Telco go-to-market approaches for upstream customer segments
  • Figure 10: Telco segments – Telco 2.0 could be valuable but can it be realised?
  • Figure 11: An historical lack of investment in services by operators threatens voice, messaging and newer Telco 2.0 solutions
  • Figure 12: Current operator metrics discourage investment in new business models
  • Figure 13: New business model investment timing dilemma
  • Figure 14: The prisoners’ dilemma
  • Figure 15: Six Telco 2.0 implementation strategies
  • Figure 16: Value-creating and value-destroying approaches
  • Figure 17: Geography determines the most important Telco 2.0 implementation strategies

To access this report:

  • The 29 page Telco 2.0 Report can be downloaded in full in PDF format by members of the Telco 2.0 Executive Briefing service here.
  • Additionally, to give an introduction to the principles of Telco 2.0 and digital business model innovation, we now offer for download a small selection of free Telco 2.0 Briefing reports (including this one) and a growing collection of what we think are the best 3rd party ‘white papers’. To access these reports you will need to become a Foundation 2.0 member. To do this, use the promotional code FOUNDATION2 in the box provided on the sign-up page here. Your Foundation 2.0 member details will allow you to access the reports shown here only, and once registered, you will be able to download the report here.
  • We’ll also be discussing our findings at the EMEA Executive Brainstorm in London (12-13 June, 2012).
  • To access reports from the full Telco 2.0 Executive Briefing service, or to submit whitepapers for review for inclusion in this service, please email or call +44 (0) 207 247 5003.

About Openet

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Openet is a leading provider of Service Optimization Software (SOS) tailored to meet the evolving needs of communications service providers, or CSPs, including wireless, wireline and cable network operators. Openet’s integrated, high-performance software solutions provide real-time policy management, rating, charging and subscriber data management solutions to enable real-time, contextual network resource allocation and monetization decisions based on information about the end user and the service being used. CSPs use Openet’s SOS solutions to enhance quality of service, create a more personalized end user experience, develop new business models and dynamically control network resources. Openet’s SOS solutions are used by more than 80 customers in 28 countries. For more information, please visit

Organisations interviewed for the report: Televisa, BBC, Intuit, Google, Tesco, MTV, Intel, TiVo, Sling, Ogilvy, Fox, Omnicom, Microsoft, Visa, Barclaycard, Ultraviolet,  PRS, American Express, MasterCard, CitiGroup, On Live, Warner Bros, MEF, Gap, Salesforce, AT&T, Verizon, Sprint,  Deutsche Telekom, Du, Teliasonera, Orange, Everything Everywhere, Turkcell, Qtel, Etisalat, Singtel, Axiata, Telekom Indonesia, TIM, Tele2.

Full Article: Devices 2.0 – Battle for the Edge; 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 Devices 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: Retail Services 2.0, Content Distribution 2.0, Enterprise Services 2.0, Piloting 2.0, Technical Architecture 2.0, and API’s 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

The growing profusion of end-user devices creates opportunities and threats for Operators, OTT players, and handset / CPE / operating software companies. Increasing amounts of intelligence and capability are to be found in Netbooks, Smartphones, Set-Top Boxes and routers. What is the consequence of this for Telcos? Are Telcos inevitably going to become dis-intermediated dumb-pipes? Or can operators deploy a device strategy that complements their network capabilities to strengthen their position within the digital value chain?


Brainstorm Topics

Stimulus Presenters and Panellists

  • Anssi Vanjoki, EVP, Nokia
  • Yves Maitre, SVP Devices, Orange Group
  • Alberto Ciarniello, VP Service Innovation, Telecom Italia
  • Rainer Deutschmann, EVP Mobile Internet, T-Mobile International
  • Dean Bubley, CEO, Disruptive Analysis; Associate, Telco 2.0™ Initiative



  • 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

Devices 2.0 – Battle for the Edge

Dean Bubley, CEO of Disruptive Analysis and a Senior Associate of the Telco 2.0 Initiative presented on the growing power of devices. Computing power at the edge is rapidly growing; even if the individual devices are still slow, they are speeding up faster than PCs, and there are so many of them. Edge power dwarfs that in the network. Control, responsibility, loyalty, attachment – these will move towards the intelligence, as they always have done. Where is the intelligence? At the edge, as the horde of gadgets gets smarter and smarter.

Soon, he argues, they will be able to tell what the operator is doing – if certain classes of traffic are being favoured or disfavoured, what they are paying for roaming or interconnection, and counteract it through ad-hoc radio networking, P2P, protocol spoofing, and encryption.

Beware! The edge and the cloud could gang up on the smart pipe, Bubley argues. In response, it’s possible to control the device, the gateway, or open up the device but try to maintain a control point somehow. What is certain is that it’s impossible to control everything..

Balancing the home and mobile environments

Yves Maitre, SVP Devices & Mobile Multimedia, Orange Group spoke on the importance of the home environment, which originates with the French experience with Minitel in the 1980s. They hope to integrate this with Orange’s history of mobility. The company is the biggest provider in Europe of VoIP, ADSL, and IPTV; their strategy is based on the Livebox and UMA. 

Netbooks are another ”first”. The company was also interested in Maemo (, but more as a test than anything else. The device ecosystem remains incredibly complex – so much closed, proprietary stuff is still out there. The industry needs to embrace a small number of strategic open source platforms.

Yves Maitre, SVP Devices & Mobile Multimedia, Orange: ”Certain things have enduring relevance – my money, my business, my friends, my health”

It’s hard to say how far to go with the customer; there are serious privacy and security risks.


Converged Services across Three Screens at DTAG

Rainer Deutschmann, EVP Mobile Internet at T-Mobile International said: Our aim is to provide access to digital assets, anywhere, any time, and on any screen, respecting the following principles: simplicity, freedom of choice, virtualisation, openness.

The walled garden was one of the worst things that ever happened; we took the decision to always be open. Digital music sales are about to pass CD sales; we’re looking at the increasing gap between Moore’s and Gilder’s laws. We want increasingly to get rid of storing anything, anywhere. Hence, he says, T-Mobile created its Connected Life and Work product, which is launching this month in Germany.

This provides an integrated multi-device contacts book, e-mail account, and content store; if you have photos on Flickr and other Web services, now you can consolidate them in one place in a very logical fashion. Importance of mobile widgets – people pay for them, unlike web pages – for key web services.

OMTP BONDI and Mobile User Experience 2.0

Alberto Ciarniello, VP Service Innovation, Telecom Italia wanted us to think of a time when it was nearly impossible to move data or applications between PCs. But mobile is like that, now!  There are lots of opportunities in mobile broadband and mobile applications, he says; there is a sharp drop off approaching in shipments of basic phones, and for that matter in SMS revenues. And everything will soon have a Web browser.


At the moment, the ”what” – the application logic or what you’re trying to achieve – is easy; the ”how” – the practical implementation or what you express in software – is much harder. A lifestyle based on devices, he says, can turn into one based on applications; and perhaps to one based on data relationships. Hence, he says, TIM has the notion of ”user experience 2.0”. Every application should work on every device. This is, or should be, true of Web/WRT applications in particular. They should be consistent – some people already have 3 or 4 devices, he says. The aim of BONDI is to provide consistent and secure access from Web applications to device and network capabilities. This is an example of successful operator-led change; BONDI and the OMTP’s organisation are designed to represent operators.

Why do we need to end fragmentation? So we can have app stores that don’t make you change your shoes. Therefore, the best approach is through the browser. But this means we need a standard for access to the device’s OS from browserspace.  He offers the example of a click-to-dial e-commerce application, something which traditionally involved big-telco technology.


Security, of course, is a huge issue; without it, BONDI would be giving Web pages access to low-level functionality! He says we need to delegate this to operators, or other security agents, because otherwise the users will struggle to manage all these issues.

BONDI must be open source and free; which will make it the first such thing ever to come from operators. He reminds us that defining the ”what”, the application logic, not discussing the ”how”, is what really matters; everything must ”just work”; porting costs should be zero. Once minimal requirements are satisfied, he says, user experience becomes the ruling factor. So check out TIM’s new dev platform at!

How Open do we need to be?

Anssi Vanjöki, EVP New Markets, Nokia believes in one Internet – no fixed or mobile. It’s easy to forecast technology, after all, we make it. But forecasting customers? People? That’s really hard.

In general, he says, future devices will all have good hardware capabilities and native programming support. This has important consequences. According to Nokia R&D’s usability research, 12% of the time an N-Series is switched on is spent making or receiving telephone calls or text messages. The rest is camera, media playback, Web browsing, e-mail, applications.

Most of the network activity involved is over cellular, but all the RF stacks they put in the devices get used. Packet radio of one form or other is now universal. And increasing chunks of total device shipments are meaningfully programmable. Devices will all be networked and programmed.

At the top end this will include 500MHz CPU, 64GB RAM, and more sensors – GPS, accelerometer, RFID/NFC, proximity… Networks will be HSPA+ merging into LTE, but it doesn’t really matter much which of those. So the next evolution of the Web will be highly contextual and semantic, based on the information from these sensors. And devices will be servers as well as clients.

Anssi Vanjöki, EVP New Markets, Nokia: ”a lot of devices look a lot like N810s – usability must be the basis of the business model.”

Participant Feedback


The devices section of the event brought together Nokia and three operator representatives, one of whom was speaking on behalf of the Open Mobile Terminal Platforms industry group (OMTP). The session considered the evolving role of both mobile phones and fixed devices like home gateways. It focused on whether or not the Telcos are able to either control their use (for example with 3rd-party Internet applications), or extract extra value from the embedded capabilities and expose these to third parties.

Telco 2.0’s view is that the device space is still poorly understood by many of those tasked with developing next generation business models, many of whom come from a staunchly network-centric background. The shift of computing power and capability towards the “edge” has already been seen in the fixed world with the advent of PCs, and is now happening in mobile with products like the iPhone and 3G dongle modems. This means that the collective power of devices in users’ homes and hands outweighs that of the operator-controlled boxes in the network core.

Operators are faced with a stark choice of either relinquishing control of the edge, attempting instead to monetise “smart pipes”, or trying to reinsert themselves into the device space to ensure greater control and pursue new revenue opportunities by prioritising their own customisations and applications. Some Telcos still seem to feel that network intelligence like DPI can outwit Internet applications running between devices and the web. Others feel that they can offer dedicated devices (fixed or mobile) that are optimised for inhouse services rather than the Internet.

The general feedback from the session highlighted the wariness with which people view devices – and to some extent the relative immaturity of device-level control and business models, versus network-resident platforms and APIs.

Feedback: General (verbatim)

  • Fantastic: 3 MNO’s with 3 different views and Nokia throwing in some disruption! [#6]
  • Why is it that the Telco presentations are so individual, when they will learn and start to learn and work across the industry, all they seem to do is want to own it all? [#7]
  • Fragmented session: device 2.0 is not shared at all. One panellist one opinion…. [#37]
  • The operators leave me cold with their lack of vision and benefit for consumers, they seem to believe they can dominate and force their ways on the consumer, this will not last [#36]
  • o    Ref 36: I totally agree. They seem to underestimate the power of the user and their ability to get what they want an not what is thrust upon them [#56]
  • Good to hear different views – at the end not the MNOs or device manufacturers will decide but the customers, who in total will be no nerds but just users [#41]
  • The balance within edge and network located intelligence will be set by customer behaviour [#60]
  • How about changing the name of the event to economy 2.0 where the digital consumer is king. The relevance then is how Telco’s can react. But certainly digital consumers (with their gadgets/devices) are king. [#22]
  • Apple have bypassed future value chain for operators and proven the operators could become dumb pipes. How do operators get back into the value chain? [#53]
  • o    Re 53, the value of the network is the ability to shape experience. The operators need to quickly figure out how they monetise the fact they know who, where, what device and crucially, what access to bandwidth you have at the time you are using a service. If they can’t do that, they become a utility. [#63]
  • re 63, SP’s should avoid being directly involved in any content activities and focus on building a highly dynamic, mass scale transactional networking business, adding experience value to partnered content. [#70]
  • Telcos must open the networks to community… and what about mobile device suppliers? [#25]
  • Will device manufacturer own the value chain, will the operator or will they really work together? [#47]
  • Depends on your view of connectivity. Is it always preferred or even feasible to connect through the internet vs. directly via personal area networks? [#58]
  • Where is the debate on the customer experience and who (and how) owns it between the Telco’s, device suppliers and service/application providers? [#62]


Feedback: T-Mobile/DTAG’s plans

Deutsche Telekom demonstrated its concept of services that run across multiple devices – PC, mobile and TV, intending to help them drive triple-play sales, and also compete in the social network / personal portal marketplace. While it was a clear demonstration of multi-device strategy, it was less clear whether it would appeal to users already loyal to services which do not require a tie-in to an access subscription.

  • Interesting plans. [#23]
  • With the different approaches mentioned by DT/TI aren’t we re-inventing the wheel again? The gentleman from the BBC put it quite eloquently. Don’t view it as Build it and they will come, instead listen to your customers and build what they want [#11]
  • The t-mobile service looks interesting, but hasn’t apple already done this? I can get all my content, e-mail etc across my i-phone, apple TV and Mac, seamlessly synced [#16]
  • o    re. 16: but apple doesn’t federate other services (except mail) – it’s largely apple services. this is about aggregating services from other service providers [#33]
  • Why does T-Mobile think it will succeed in the market with yet another UC product? And why do they think users will demand the same interface across all devices? This is not reflective of current practice [#19]
  • o    Agree on 19 – this looked like a walled garden approach despite Rainer saying DT was very opposed to walled gardens. [#29]
  • o    Re 19: Not my view – current practice doesn’t take the customer in account at all – at least not the mass market. You have to be an expert to make reasonable cross devices usage, if you succeed at all [#68]
  • T-Mobile: What’s is the Biz model behind Connected Live and the differentiation regarding specialist like GMail, Flickr, Napster, etc? [#12]
  • How will T-mobile cover the social network of customer outside their customer base? [#13]
  • Very sexy Rainer. Can you tell us more about the business model? Does the product provide pull through for IPTV, mobile and fixed broadband? or do you charge users a subscription (which will kill it before it takes off)? or is there a two-sided play? [#14]
  • Very interesting model from DT and very similar as mobile-me from Apple who does the same since a year back. Any other SP who will do the same? [#27]
  • I have 100Gb + of digital assets/content. will the t-mobile service provide enough storage in the cloud for all of this? [#28]
  • If T-Mobile is open, why do you block Skype and alike? [#31]
  • Three screen strategies from operators like t-mobile and orange are simply enhanced defensive lock in strategies, do they really move the open and 2-way business model forward at all? [#59]


Feedback: Nokia

As well as the operator viewpoint on devices, the vendor angle was clearly expounded upon by Nokia’s Anssi Vanjoki, who pointed out the increasing capabilities of mobile phones and other products. Although reference was made to operator-related services, it was also clear that Nokia’s view of future business models did not need to rely on Telco platforms. Several commentators expanded on the implications of this.

  • Nokia at least have a view of the future that is a vision people can buy into, not a vision that seeks to control all [#10]
  • All the intelligence in the mobile phones (Nokia like) means no intelligence for all!!!! [#40]
  • If Nokia thinks 15% for voice and messaging – does he think subsidy on high end phones will go? [#8]
  • How does Anssi (Nokia) resolve the need to synch between multiple devices (Tera-play)? [#9]
  • If it’s all in the handset, why did Nokia buy empocket? [#17]
  • Any idea if Ovi Store will accept PyS60 apps as well as WRT and Objective C? [#39]
  • Mobile Web Server is just a techie toy isn’t it? [#42]
  • Nokia’s view: contextual/real-time awareness. [#43]
  • If Nokia is right, what will be about the internet-enabled TV’s that start to spread and will also have (controlled) access –> customers will need device independence! [#54]

Feedback: BONDI/Telecom Italia

Telecom Italia spoke about the OMTP’s BONDI Initiative, which involves working with W3C to develop a new way to run interactive widgets and web applications across phones supporting different OS’s. However, Telco 2.0 believes that this concept (which is alien to a lot of network-centric people) still needs to be explained more clearly and more widely, before the industry understands its potential significance. In theory, the ability for an operator to assist web-based applications with secure access to underlying device capabilities should enable various new business models.

  • BONDI concept is necessary to eliminate the multi-device compatibility issues [#45]
  • Bondi looks something that limits customer freedom. All customer freedom limitations will fault quickly! [#50]
  • Is the vision that Bondi becomes an industry standard or a proprietary solution for TI? [#15]
  • o    Re 15 – BONDI is an industry initiative, not TI only! [#26]
  • Are Apple and Nokia all supporters of BONDI or is this just the Telcos and the open source companies supporting this? [#35]
  • Who owns the application in Bondi? Will the Telco be able to get revenue [#44]

Feedback: Outstanding Issues

What remained unclear from the session was exactly how devices might fit into two-sided business models. How could developers or other “upstream” players benefit from device capabilities? The emphasis seemed to be much more on Telcos using their device input to exert control, rather than monetising openness, and several of the contributors commented on this.

  • History repeats itself. Brings my thoughts to OSI – ODA etc. Loads of time spent with little result [#38]
  • When will the SP community come together to develop a sustainable model for their API’s that works across all networks, thereby getting the benefits of scale, why do they all reinvent the wheel [#24]
  • One item mentioned earlier today was applications were the way to monetize a ‘service’ or website, nothing on the business model was mentioned. Where is the enhanced revenue in each of these approaches? [#30]
  • Where is the 2-sided business model? [#32]
  • What is the open mobile platform of the future? [#34]
  • Rainer: we heard Yves telling us that we need standards for the devices. How can reach a consistent experience around 3-screens (clients etc) and how are you capable to open to 3rd parties? [#49]
  • How to open the Telco infrastructure without open device site? [#51]
  • Don’t we have already a 2-sided business model today between mobile Opcos and device manufacturers in many countries? Opcos buy handsets wholesale and resell them with a rebate (aka handset subsidy) to the end customer. [#52]
  • o    Note 52: how is that 2-sided? Isn’t the revenue being produced only by the customer? [#57]

General Questions

Perhaps reflecting the lower general emphasis on devices within the Telco 2.0 community, the session also threw up a number of more general questions (some of which we’ve tried to answer in red).

1.     Do we that the trend is the same for devices in developed as in emerging markets? [#18] [Telco 2.0 – devices in emerging markets are slowly becoming more powerful, but probably 3-4 years behind on average. More interestingly, the majority in markets like India are unsubsidised and do not feature operator-specific features, so will be even more difficult to control. Lack of fixed broadband means that the home gateway is less prominent]

2.     If devices become much more powerful how quickly will batteries die? [#20] [Telco 2.0 – battery life improves much more slowly than processors. However, it is often the screen that draws most power, not the processor. Various initiatives like multi-core processors will appear in handsets to help manage power, but it’s still an important issue]

3.     Where will dell and other pc manufacturers play in this conversation? [#66] [Telco 2.0 – yes, up to a point, especially with 3G-enabled laptops and MIDs. However, only a small fraction are likely to be directly Telco-controlled, especially in the enterprise. Most PC users are unlikely to accept operator interference in their choice of apps, although this changes a little where cheap PCs are subsidised]

4.     What is the projected battery life? Especially when up / downloading masses of data [#67]

5.     re 65 where will storage companies play [#69] [Telco 2.0 – There may be a broader role to play in the device space either for home servers (eg Linksys) or flash memory (eg Sandisk) in enabling new services, although this sector is still immature]

6.     What about the role of the SIM and can operators leverage the SIM to restrict the power of device manufacturers with consumers and use it to innovate new service models? [#61] [Telco 2.0 – the SIM card is definitely a core element of operator control and some new services. But not all devices have SIMs, and consumers are unlikely to accept SIM-locked PCs or TVs, especially if they connect via non-mobile access channels, or are unsubsidised. SIMs also have issues of legacy replacement, and are awkward for running applications across multiple carriers]

7.     A lot of focus in this session on mobile devices, what about a truly open set top box and EPG, not tied to an operator service but open for the user to choose services and subscribe as appropriate [#55]

8.     [Telco 2.0 – There is huge potential for a standards-based platform for STBs across multiple operators, which would enable diverse business models for video delivery. The BBC’s Project Canvas is an effort in this direction, and the Linux community has developed several technical solutions for the CPE. However, the regulatory issues have been extremely problematic everywhere it has been tried.]

Participants ‘Next Steps’ Vote

Participants were asked which device strategy would offer Telcos the most realistic opportunity to deliver profitable new services and business models in the future?

  • Telco designed and controlled smart devices (e.g. custom smartphones, operator specific digital picture frame)
  • Separate Telco controlled gateway device (e.g. femtocell, set top box) used with open edge device.
  • Open device with Telco control of policy software (e.g. netbook with sim & operator connection software).
  • Forget about controlling devices, we can manage everything in the network.
  • Forget devices, we can control things in the network.


Lessons learnt & next steps

Unfortunately, Telco strategists still appear to expend more efforts on examining infrastructure and centralised application platforms, rather than the network “edge”. Although obviously some within operator organisations are focused on the users’ hands and homes, there is often no more general recognition of the shifting balance of power – in terms of both influence and computation. The rise of the iPhone and similar devices has helped redress the balance somewhat – but even there, the emphasis has shifted to the more “comfortable” centralised AppStore as something for operators to emulate.

This is understandable. By and large, few fixed or mobile operators have successfully helped create new types of devices on their own. A few broadband providers have used home gateways as new service platforms, or as ways to reduce churn, but even these have tended to just be through the addition of functions like IPTV or VoIP. Few consumers would view their broadband “box” as a central hub of a home network – despite 10+ years of discussion of interconnection with consumer electronics, utility meters and home automation. All the talk of Telcos exploiting connectivity to HiFis or “screen fridges” has been hot air.

Alberto Ciarniello, VP Service Innovation, TIM: ”’Apple shipped 1bn apps at significant average revenue per user. It’s unprecedented. It’s generated a lot of traffic and a lot of stickiness.”

In the mobile space, the power of Nokia, Apple, RIM and others is always set against operators’ desire to customise applications or user experience. Although in developed markets, a high % of phones are sold through operator channels, the use of embedded operator-specific applications and on-device portals has had only limited commercial benefit. Probably the most important customisation has been the configuration of the Telco’s own portal as the default browser home page. If anything, the shift towards smartphones and PC-based mobile broadband has further weakened Telcos’ role – the majority of 3G data traffic goes straight to and from the Internet from “vanilla” devices.

Anssi Vanjöki, EVP New Markets, Nokia: Our user studies show that 12% of user time on the N-series is telephony or messaging; the rest is Web browsing, camera, media playback, e-mail, and applications.

The future possibly holds some more hope. The audience at the event was strongly in favour of pushing for Telco “control points” in otherwise open devices. This fits well with the heritage of SIM cards (which are expanding in capability) as well as standardisation in areas like the browser and widget frameworks (eg OMTP BONDI). Software pre-loaded with PC dongles or embedded 3G modems is another option. [Telco 2.0 is much more sceptical of the benefits of the RCS client advocated by the GSMA and certain operators]. In the converged triple/quadplay space, femtocells offer another point of control and service delivery, close to the customer – although the notion of a separate “gateway” product was viewed with less enthusiasm at the Nice event. New classes of devices such as MIDs, operator-enabled consumer electronics (Internet TVs, 3G musicplayers, in-car systems etc) also hold promise, but are seen more as low-risk experiments at this point.

In terms of next steps, the Telco 2.0 team feel that, in the short term (c12 months), operators should:

  • Aggressively pursue “must have” devices like the iPhone – even if there is a short-term pain point around loss of control. At the moment, customers are still device-centric.
  • Think twice about pushing end-users towards smartphones – instead, look at data plans coupled to higher-end featurephones, especially those with good browsers, touchscreens etc.
  • Assess the business opportunities around OMTP’s BONDI model at a strategic level
  • Revisit the realistic opportunities afforded by next-generation SIM cards for both PCs and phones.
  • Beware of certain device categories which will need new business/charging models to succeed broadly in the marketplace – for example, embedded-3G PCs are an “elegant concept”, but fail to meet the needs of massmarket consumers (or enterprises) at present.


Longer term, additional considerations are more pertinent:

  • Look at exploiting devices used by customers on other Telcos’ networks – there is no reason that operators cannot themselves become successful “over the top” players.
  • Look closely at using femtocells (plus handsets) as a new platform for innovative in-home services.
  • Work closely with utility companies on new smart metering / environmental monitoring applications.
  • Remain wary of new technical standards for devices that promise new opportunities – but require the creation of complete new ecosystems, and which potentially compete with other easier technologies. RCS and NFC are particularly exposed, in Telco 2.0’s view.
  • Expect developers to migrate towards the coolest and most computationally-powerful platforms. This may mean that the API strategy of the operator needs to become more device-centric over time.