Chief Disruption Officer

An online bookstore did not only redefine retail, content distribution and gave the postal services a second chance, it also is becoming the world’s data centre. The best way, to find out if the hot school girl is open for a new relationship, is now showing IT companies how to build servers & routers and telecom giants how people like to communicate. An online search and advertisement company has revolutionised how you find anything from text, images, location, etc. It redefined mobile computing together with a fruit-like branded company. It has global networks that even the biggest telecom incumbents can only dream off. It has cars that drive alone. Body accessories that puts science fiction authors next to historians.

At the same time stamps, travel agents, maps, telephone books, book publishers, bill boards, broadcasters, movie theatres, journalists, photo film, media storage, video cameras, taxi services, estate agents, high street shops, etc. have changed and not always for better.

If you work for a “traditional” company are you sure that in five years your company still is in business or can it be that some unknown small company launched a product that makes your company’s best products look like they belong in the history museum? Remember Nokia phones!!! Five years ago they had record sales…

If software disruptors have so much power, why aren’t companies hiring chief disruption officers. Senior executives whose goal it is to setup disruptive new product families that are owned by traditional players but are allowed to question any industry rules and launch cannibalising offerings often as independent companies.

It is a lot better that a big bank owns a bit coin exchange, a peer to peer lender, a crowd funded venture capitalist, a mobile payment provider, a micro payment cloud broker, a mobile app currency exchange, a machine learning financial adviser, etc. then being put out of business by any disruptive challenger.

Of course you can always copy the telecom model. Have everybody in your company look for potential cost reductions in the form of virtualized networks, squeezing (and killing) suppliers, etc. while your (mobile) broadband network is 12-36 months away from a data tsunami in the form of 4k streaming video, free mobile video calls, fitbits telling the cloud every minute (or second) your average heart beat and twenty other vital signs, free frequency crowd sourced mobile networks, etc. At a time where your business model has not seen a margin improvement in 10 years, your costs are exploding and your revenue will melt faster than ice in the Sahara.

Why don’t you think about hiring a chief disruption officer before you need to hire a chief miracle officer…

Telco innovators and the rest…

2014 will be the year in which telecom will be split into two. The ones that understand iCommunication and the ones that don’t. iCommunication is about giving a personalized communication experience to consumers and enterprises. Low cost subscription models and freemium will be the main business models. Low-cost pay per use is still possible but not for messaging or voice traffic. The value proposition needs to be higher.

What will this mean?
Bit pipes will become a reality in Europe and possible in the US (mainly dependent on what Google and others do). Telecom operators massive head count reductions. Nokia & Blackberry will be joined by other one time big telco names. The end of the world for some. Especially for those that belief telecom is a dividend generator or a bottomless pit for license taxation…

For consumers and enterprises there will be a new world of communication possibilities. Communication will be fully integrated into back office systems, e.g. CRMs like Salesforce store all calls. Improvements in voice recognition will make talking to machines a natural interface. Managing contacts will become a breeze. Forget memorizing phone numbers…

Communication as a Service will be the big innovation. The Cloud, Big Data, IoT will meet IP communication. Whatsapp will have a bigger brother for voice and video. Unless Google and Apple surprise the market with joint IP-based communication over LTE and WiFi. Asia, Africa and Latam will have two more years but most of their operators will make the same mistakes as the European ones.

Bit pipes are not even a safe business because the Ryanair of telecom will be able to quickly pickup mobile licenses and networks of the third/forth player, the one that goes bankrupt.

Things will not look nice for the next three years for some but we all knew that it was going to come for the last 10-15 years. Any CxO that calls this an unforeseen disruptive technology should be fired on the spot. The next edition of the Innovators Dilemma does not have to go back to the last century for examples. This is a textbook case for MBA students for years to come…

Telecom Blue Ocean Strategy

None of the incumbant telecom providers has put into place any Blue Ocean Strategies. Blue Ocean Strategies have made the Circus, Wine, Gaming, Airline, etc. industries exciting again, so why not apply it to the telecom market. The only telecom players, I know of, that implemented some blue ocean strategies are Free in France, GiffGaff in the UK and Freedompop in the USA. So why not do a Blue Ocean Strategy exercise in this blog post.

Here is my strategy canvas:

Traditional operators focus on charging heavily for calls and SMS although lately more and more packages with free minutes are available. International calls however are still charged extremely expensive. Mobile phones are subsidized up to 24 months and as such you need to stay with them for at least this period. Operators spend a lot of their money investing in the roll out and maintenance of their networks. They also have very complex pricing plans and as such need heavy investments in BSS.

MVNOs try to compete on price and most often do not subsidize mobiles. They do not have their own network as such they do not need to invest in it. They offer less tariff plan options. You are often free to change whenever you want. To make up for not subsidizing mobiles, you can get mobile loans which means you have some sort of permanence.

So how would Blue Ocean Mobile do it differently?

In line with Free’s example, call costs should be eliminated, including international costs. Mobiles should not be subsidized but cheap mobile loans should be offered for those that do not bring their own device [BYOD]. Blue Ocean Mobile should focus on LTE and try to win LTE licenses. However instead of doing heavy investments in installing antennas everywhere, Blue Ocean Mobile should only install antenna’s in those areas where few people live but connectivity is required, e.g. major highways. This is in line with Free’s strategy. However unlike Free, the operator’s network should not be built with unreliable WiFi hotspots. Instead specially designed “Personal Antennas” should be sold to everybody who wants one. What is a personal antenna? A personal antenna is a nanocell LTE antenna. A personal LTE antenna in your home that not only gives service to you but also to neighbours and people close to your home. The idea is that you become a sort of mini-LTE ISP to which others can connect. For every KB that gets transferred through your personal LTE antenna, you will get a revenue share. So it is in people’s interest to put the personal antenna in a place where it can service a lot of people and to have a good backbone Internet connection. People should be able to win back their investment in the Personal Antenna in a few months and make money afterwards. This should allow Blue Ocean Mobile to seriously lower their investment in rolling out an LTE network and to get free mouth-to-mouth advertising. Via a software-defined network [SDN] management system all nanocell LTE antennas are controlled by Blue Ocean Mobile.

Since Blue Ocean Mobile is focusing only on data traffic, it should work together with “over-the-top players” to offer a compelling list of services. Ideally Android Phones and the iPhone will use the data network for calling others instead of a circuit network. Customers should have a full range of BYOD management options so small and medium-sized businesses can easily manage the phones of their employees as well as push enterprise applications towards them.

Blue Ocean Mobile should also try to avoid investment in BSS. Tariff plans should be easy with the customer defining how many free megabytes they want to purchase for a fixed monthly fee and a simple extra charge for overage. So instead of operator defined tariff plans, everybody has a personalized tariff plan that they can adjust every day. Calls and SMS are charged based on data traffic not on per minute charges. VoIP solutions is the standard. Blue Ocean Mobile does not have a circuit network or SS7.

Blue Ocean Mobile is also copying the long tail support from Giff Gaff in which customers give support to other customers and are responsible for marketing. Unlike Giff Gaff not only prepaid but also subscriptions are supported. Like Giff Gaff customers get a revenue share when they participate in support or marketing.

Blue Ocean Mobile’s strategy is just very high-level and still needs in-depth analysis but it is an open invitation for innovative people to start applying Blue Ocean strategies to anything they feel in need of disruption.

Maarten Ectors is a senior executive who is an expert in applying cutting edge technologies (like Cloud, Big Data, M2M, Open Hardware, SDN, etc.) and business innovations to generate new revenues. He is currently looking for new challenges. You can contact him at maarten at telruptive dot com.

What if there were no Over-the-Top-Players?

What would have happened to the telecom industry if there were no over-the-top-players [OTP] and disruptive innovators?

• Nokia would still be the phone leader and touch screens would not exist.
• Parlay would be the most easy to use telecom asset exposure API.
• MMS would be the only way to share images.
• On-site equipment would be necessary for each enterprise.
• LTE would be a data highway without demand.

If this sounds borring then you are right. OTP and disruptive innovators have brought excitement again. People want to know about new phones, faster data plans, tablets, etc.

However the more important question is why are telecom operators and traditional telecom providers not able to innovate like OTPs?

There are many reasons: canabalization of existing business, too complex Backoffice architecture, etc.
However the main reason is mindset! Most people that have spend at least 5 years in the telecom domain have started to assume that telecom beliefs are as strict as fundamental laws of physics:

• if it is not a standard it does not exist
• if it is not telco grade and build out of expensive software and hardware it does not exist
• if it is not controlled from the network it does not exist
• if it has very high revenue and cash flow for me then it is good for customers
• if it does not run in my data center and is fully integrated into all my BSS and OSS then I can not launch it

Unfortunately most operators you speak to still do not realize that these rules have been successfully broken by OTPs.

The same mistakes are still made every day: Joyn, WAC, OneAPI, etc. are all trying to be a standard before being successful, all have to be integrated into all Backoffice systems before launch, etc.

The day telecom operators realize that they have overpaid suppliers to deliver them a too complex architecture to be useful, implemented according to some standard body that is making things too complex in order to still be relevant, etc. will be the day OTPs should be afraid. Unfortunately this day looks like it will never come. If you would bet your house on one bet. What would it be? Telecom operators get over their flawed traditional beliefs or OTPs succeed in converting operators into bitpipes. There is still time to change the future but the future starts today…

Can an operator give away 1GB/month or more for free? This MVNO believes it can…

After Free.fr in France, the US is also getting its “Enfant Terrible” of the telecom market. Just when everybody thought becoming Bitpipes would be the way forward, this US MVNO is going to give away broadband for free. We are talking about FreedomPop. FreedomPoP will give subscribers 1GB/month for free. Except for Freemium, it will also copy other dotcom techniques like Social Marketing & Sales. For every subscriber you bring, you get more bandwidth. Additionally you can swap the bandwidth that you do not use with others. FreedomPop will also provide some Wimax-iPhone-shell that allows multiple users to connect.

How are they going to make money?

The short answer: still unknown. The long answer: Skype founders are behind the company so VoIP is probably charged. People that spend more than 1GB will have to pay $0.01/MB or $10/GB. There is also talk about making money with value-added services.

Conclusion

It is still too early to understand the impact of what FreedomPop will have on the 4G mobile market in the US. However the fact that Freemium, Social Marketing & Sales, etc. are used means that finally some operator is doing their homework and translating Web practices into Telecom practices…

How to be part of the mobile revolution?

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
• Advertisement
• Sales & campaign management
• Accounting
• etc.

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.
• etc.

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)
• etc.

The number of unique assets is shrinking. It is now or never to make money with them.

10 ways telecom can make money in the future a.k.a. telecom revenue 2.0

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]…

Usergrid – An impressive open source Mobile PaaS example

Apigee bought Usergrid. Usergrid is the type of Mobile PaaS that you would expect mobile operators to be launching. Usergrid is open source as well as available as a hosted service. Usergrid allows mobile developers to focus on mobile apps and not on the server. Everything from storing users, groups, roles, single sign-on authentication, social aspects (e.g. likes), feeds, queries, connections between users and objects (e.g. which friends of user X like restaurant Y), etc. is dealt with via an incredibly easy REST API. Usergrid also comes with toolkits for easy iOS and Android development.

Usergrid is impressive both as an idea as well as in how easy it is to build complex mobile applications, e.g. collective voting during a conference, etc. without back-end developement.

What is next?

Combining Usergrid with one of the many visual drag-and-drop mobile app development tools would allow users to create complete mobile apps without coding.

Being able to integrate other API based services into the same visual drag-and-drop development tool would allow even more complex applications: e.g. look at programmableweb for a list of thousands of public APIs. However ideally also private APIs (e.g. towards enterprise back-office systems) could be incorporated.

Finally being able to monetize these new mobile apps via in-app advertisement, enterprise mobile app stores, etc. would motivate developers to build millions of useful mobile apps.

Mobile PaaS is a very exciting domain and operators should be very actively investing in it…

Why are operators not offering more Cloud-based Telephony?

Offerings like OpenVBX, Invox, fonYou, Ring Central, etc. are all hybrid cloud solutions whereby the power of IP and the Cloud is combined with traditional back-office integrations.

These should be a clear low-hanging fruit for operators. Extra revenue from existing infrastructure, often via revenue sharing instead of CAPEX. What more do you want?

The ideal cloud-based telephony system?

Although the aforementioned cloud telephony solutions are all great products, they seem generation 1.0 of Cloud Telephony. What is still missing?

First of all an integration of different aspects would be a first step: OpenVBX has a great plug-in mechanism, Invox a very powerfull drag-and-drop UI, fonYou an easy-to-use consumer focused feature set and Ring Central the same but enterprise-focused. Why not combine this?

Developers should be able to create plug-ins and have open APIs available, like OpenVBX/Twilio. Advanced users should be able to use an Invox-style drag-and-drop UI to create their own services. They should be able to choose from plug-ins that are provided by an open market of developers. Basic applications should be ready to use by end-users (consumer & business) however these applications should have extension points to allow OpenVBX and Invox type-of-extensions to be added. An example would be voicemail whereby custom extensions could create totally new experiences (e.g. update a CRM, write on a Facebook wall, etc.). Ideally there is also an application developer front-end that allows to create applications based on OpenVBX and Invox type-of-extensions and put an easy to use GUI on it. These new applications could then form part of a marketplace from which end-users (consumers & business) can choose. Small extra subscription fees allow for developers and advanced users to get a revenue share to compensate for their work and to attract innovation.

Step two would be to add more and more non-telecom aspects: social network integration, gamification aspects (who is the top communicator among your circle of friends) or even pure telephone games, machine learning aspects both for voice transcription (record your calls, transcribe them and have people correct mistakes and as such teach the system) and as well as other aspects (assign new contacts to groups automatically), etc. 

Step three would be to use more advanced telecom assets, e.g. custom numbering plans and custom VPN (set-up special numbering schema for my family or friends), assign and group numbers (unified experience for my business mobile, personal mobile and home phone), anonymously or via oauth share my call list with others (mobile social graph type of applications) as well as my device and location, etc.

MWC 2012 in Barcelona is not focusing on new revenue

MWC is supposed to show off the best innovations in the telecom industry. The telecom industry is desperately in need of a new business model to substitute falling revenues and pay for exploding data costs.

There were a lot of LTE innovations that were announced. However these will only generate new revenues for the solution providers and not for the telecom industry as a whole.

M2M was another major innovation area. However there was no announcement of any standardization whereby several large operators would push a common standard. Without this standard it will be hard for large scale M2M projects to deliver large profits. If the telecom industry wants to be seen as the leader in the M2M then they should take a leading role in its standardization.

Augmented reality is also pushing strong. However most players are over-the-top companies and not telecom solution providers or telecom operators.

Lots of new phones and tablets but this will also not generate new telecom revenues but will probably push operators into bit pipes sooner.

Cloud computing, big data, collective intelligence, gamification, etc. were under-represented. A lot of slides but few real mind-blowing products.

Operators are probably the once to blame most for this. There is no clear signal from them that they will be investing in revenue generating solutions in 2012-2013. The only thing you can hope for is revenue sharing. Why if you invest in making a stellar product would you want to go to endless RFPs and complex integration solutions if you could launch the product by yourself and become a successful over-the-top-player?