There are more phones sold than PCs. In the near future there will be many, many, many more phones sold than PCs. Also most of these phones will be smartphones. Tablets are also going to surpass PC sales in the coming years.
With so many mobile phones and tablets how can the telecom industry generate new revenues?
The first thing to understand is what are people doing on their mobile. Any other industry would need to start doing surveys. However the telecom industry just needs to check their networks. This is the first possible new revenue stream. Big Data business intelligence about what mobile users are doing. Are they buying apps? From where? Are they using apps? Which ones? Are they browsing the web? Where? The data volumes are massive but the value is extremely high. Machine learning could be used to cluster different types of users. As soon as these clusters are big enough then it is possible to sell the data. The more precise the clustering, the higher the value.
If you know what customers do, then help them to do it better
Via opt-in it would be possible to actively help users. Recommendation based on similarity is possible: other users have “bought this app”, “looked at this page”, “subscribed to this service”, etc. If successful then advertisement will generate revenues.
Enable others to accelerate the mobile revolution
What would an entrepreneur need to start a mobile business? Likely 80-90% of the needs are the same:
- Find capital
- Register a company
- Find employees
- Design a winning product strategy
- Set-up a mobile presence (mobile portal, news, blog, etc.)
- Develop mobile application or SaaS (user management, single sign-on, reporting, analytics, code versioning, etc.)
- Test mobile application or SaaS
- Deploy mobile application or SaaS to different stores.
- Charge for in-app or content
- Sales & campaign management
Be the restaurant, tool shop and hotel, next to the gold mine. Do not try to look for gold. Try to make money from the gold diggers. Provide enablement services.
What would an enterprise need to manage the mobile revolution?
Everybody brings their own smartphone and tablet to work. This can save the company millions in purchasing equipment but on the other hand costs a lot more money in management.
- Enabling new devices to connect to enterprise resources.
- Securing access (storage encryption, single sign-on, etc.).
- Monitoring usage.
- Mobilizing business processes.
- Helpdesk support.
Bring your own device (BYODaaS) and mobile business processes as a service (MBPaaS) are areas to focus on.
What would consumers need from the mobile revolution?
Lots of things. Unfortunately consumers are already heavily catered for by Apple, Facebook and Google. Operators are likely to fail if they go in direct competition with over-the-top players. However operators also have a history of being difficult to work with, slow and greedy. There is no killer app. There are only some assets operators have that are still valuable:
- Who calls who? (On iPhones and Androids this asset is becoming less valuable)
- Free call forwarding (Lots of business models do not survive paid call forwarding, e.g. Voicemail in the Cloud, PBX for consumers, etc.)
- Quality of Service (every day seems more like location. A big promise but at the end somebody else found a workaround.)
- Micro-payments and micro-subscriptions (Visa, Google Wallet, Paypal & Square are heavily attacking this one.)
- Identity (MSIDN is globally unique but OpenID/oAuth and other innovations are allowing Facebook and others to offer almost global identity)
The number of unique assets is shrinking. It is now or never to make money with them.
LTE roll-outs are taking place in America and Europe. Over-the-top-players are likely to start offering large-scale and free HD mobile VoIP over the next 6-18 months. Steeply declining ARPU will be the result. The telecom industry needs new revenue: telecom revenue 2.0. How can they do it?
1. Become a Telecom Venture Capitalist
Buying the number 2 o 3 player in a new market or creating a copy-cat solution has not worked. Think about Terra/Lycos/Vivendi portals, Keteque, etc. So the better option is to make sure innovative startups get partly funded by telecom operators. This assures that operators will be able to launch innovative solutions in the future. Just being a VC will not be enough. Also investment in quickly launching the new startup services and incorporating them into the existing product catalog are necessary.
2. SaaSification & Monetization
SaaS monetization is not reselling SaaS and keeping a 30-50% revenue share. SaaS monetization means offering others the development/hosting tools, sales channels, support facilities, etc. to quickly launch new SaaS solutions that are targeted at new niche or long tail segments. SaaSification means that existing license-based on-site applications can be quickly converted into subscription-based SaaS offerings. The operator is a SaaS enabler and brings together SaaS creators with SaaS customers.
3. Enterprise Mobilization, BPaaS and BYOD
There are millions of small, medium and large enterprises that have employees which bring smartphones and tablets to work [a.k.a. BYOD – bring-your-own-device]. Managing these solutions (security, provisioning, etc.) as well as mobilizing applications and internal processes [a.k.a. BPaaS – business processes as a service] will be a big opportunity. Corporate mobile app and mobile SaaS stores will be an important starting point. Solutions to quickly mobilize existing solutions, ideally without programming should come next.
4. M2M Monetization Solutions
At the moment M2M is not having big industry standards yet. Operators are ideally positioned to bring standards to quickly connect millions of devices and sensors to value added services. Most of these solutions will not be SIM-based so a pure-SIM strategy is likely to fail. Operators should think about enabling others to take advantage of the M2M revolution instead of building services themselves. Be the restaurant, tool shop and clothing store and not the gold digger during a gold rush.
5. Big Data and Data Intelligence as a Service
Operators are used to manage peta-bytes of data. However converting this data into information and knowledge is the next step towards monetizing data. At the moment big data solutions focus on storing, manipulating and reporting large volume of data. However the Big Data revolution is only just starting. We need big data apps, big data app stores, “big datafication” tools, etc.
6. All-you-can-eat HD Video-on-Demand
Global content distribution can be better done with the help of operators then without. Exporting Netflix-like business models to Europe, Asia, Africa, Latin-America, etc. is urgently necessary if Hollywood wants to avoid the next generation believing “content = free”. All-you-can-eat movies, series and music for €15/month is what should be aimed for.
7. NFC, micro-subscriptions, nano-payments, anonymous digital cash, etc.
Payment solutions are hot. Look at Paypal, Square, Dwolla, etc. Operators could play it nice and ask Visa, Mastercard, etc. how they can assist. However going a more disruptive route and helping Square and Dwolla serve a global marketplace are probably more lucrative. Except for NFC solutions also micro-subscriptions (e.g. €0.05/month) or nano-payments (e.g. €0.001/transaction) should be looked at.
Don’t forget that people will still want to buy things in a digital world which they do not want others to know about or from people or companies they do not trust. Anonymous digital cash solutions are needed when physical cash is no longer available. Unless of course you expect people to buy books about getting a divorce with the family’s credit card…
8. Build your own VAS for consumers and enterprises – iVAS.
Conference calls, PBX, etc. were the most advanced communication solutions offered by operators until recently. However creating visual drag-and-drop environments in which non-technical users can combine telecom and web assets to create new value-added-services can result in a new generation of VAS: iVAS. The VAS in which personal solutions are resolved by the people who suffer them. Especially in emerging countries where wide-spread smartphones and LTE are still some years off, iVAS can still have some good 3-5 years ahead. Examples would be personalized numbering schemas for my family & friends, distorting voices when I call somebody, etc. Let consumers and small enterprises be the creators by offering them visual do-it-yourself tools. Combine solutions like Invox, OpenVBX, Google’s App Inventor, etc.
9. Software-defined networking solutions & Network as a Service
Networks are changing from hardware to software. This means network virtualization, outsourcing of network solutions (e.g. virtualized firewalls), etc. Operators are in a good position to offer a new generation of complex network solutions that can be very easily managed via a browser. Enterprises could substitute expensive on-site hardware for cheap monthly subscriptions of virtualized network solutions.
10. Long-Tail Solutions
Operators could be offering a large catalog of long-tail solutions that are targeted at specific industries or problem domains. Thousands of companies are building multi-device solutions. Mobile & SmartTV virtualization and automated testing solutions would be of interest to them. Low-latency solutions could be of interest to the financial sector, e.g. automated trading. Call center and customer support services on-demand and via a subscription model. Many possible services in the collective intelligence, crowd-sourcing, gamification, computer vision, natural language processing, etc. domains.
Basically operators should create new departments that are financially and structurally independent from the main business and that look at new disruptive technologies/business ideas and how either directly or via partners new revenue can be generated with them.
What not to do?
Waste any more time. Do not focus on small or late-to-market solutions, e.g. reselling Microsoft 365, RCS like Joyn, etc. Focus on industry-changers, disruptive innovations, etc.
Yes LTE roll-out is important but without any solutions for telecom revenue 2.0, LTE will just kill ARPU. So action is required now. Action needs to be quick [forget about RFQs], agile [forget about standards – the iPhone / AppStore is a proprietary solution], well subsidized [no supplier will invest big R&D budgets to get a 15% revenue share] and independent [of red tape and corporate control so risk taking is rewarded, unless of course you predicted 5 years ago that Facebook and Angry Bird would be changing industries]…
Over-the-top players are better at understanding how people communicate. New disruptive solutions can undermine traditional enterprise solutions, e.g. PBX versus virtual PBX. Mobile network disruption is possible, e.g. White spaces. Data is exploding due to mobile Internet and especially mobile streaming video. Unknown players in the telecom space 5 years ago are now dominating the industry, e.g. Apple and Google. ARPU’s are melting faster than snow in the sun. IP requires new skills compared to circuits.
All these problems result in one need for telecom operators: new revenues. However existing telecom providers see a more lucrative market in deploying the next generation of network technology: LTE.
If operators want everybody to understand that their new priority is generating new revenues then they need a new term for it. My proposal: telecom revenues 2.0.
Why is it important to have a new term?
Lots of telecom suppliers still think that by virtualizing their existing solutions, e.g. VAS, or by selling some “innovative” rich communication suite that is 3 years behind OTP offerings, they can offer new revenues for the telecom industry. Unfortunately Joyn and other similar solutions are too few too late to make a real difference. We need a lot bolder solutions if telecom operators want to be more than bit pipes. This is where telecom revenue 2.0 identifies those solutions that can bring a new beginning to the telecom industry. It will also clearly identify where R&D budgets should be spend. That is if telecom operators clearly tell their providers that telecom revenue 2.0 will be their second biggest destination of investment after LTE. Operators that think that revenue share will automagically being them telecom revenue 2.0 should think again. Dotcoms are not getting money from Venture Capitalists if their revolutionary service involves telecom operators. The reason is that telecom operators are seen as too difficult to work with and too greedy when it comes to revenue sharing. Investment either in joint R&D or seed capital are needed if telecom revenue 2.0 is to become a reality. The alternative is clear: shrink and be happy to survive as a bit pipe….
With Hadoop/Hbase/Hive, Cassandra, etc. you can store and manipulate peta-bytes of data. But what if you want to get nice looking reports or compare data held in a NoSQL solution with data held elsewhere? There have been two market leaders in the Open Source business intelligence space that are putting all their firepower onto Big Data now.
Pentaho Big Data seems to be a bit further ahead. They offer a graphical ETL tool, a report designer and a business intelligence server. These are existing tools but support for Hadoop HDFS, Map-Reduce, Hbase, Hive, Pig, Cassandra, etc. have been added.
Jaspersoft’s Open Source Big Data strategy is a little bit behind because connectors are not included yet into the main product and several are still in beta quality and with missing documentation.
Both companies will accelerate the adoption of big data since the main problem with Big Data is easy reporting. Unstructured data is harder to format into a very structured report than structured data. Any solutions that will make this possible and additionally are Open Source are very welcome in times of cost cutting…