How Google wants to change networking.

Quagga might remind a little majority of people of an extint African zebra. However Quagga is also the name of an open source project that focuses on the future of networking. It is one of the projects that is being boosted by Google push for Open Source Networking. Google has joined hands with the Internet Systems Consortium to found Open Source Routing. Open Source Routing focuses on bringing Open Source solutions for Openflow, Software-defined networking and other technologies that are needed in today’s Webscale networking. Google also is pushing the ALTO protocol in order to improve quality of service for P2P and more importantly content delivery networks.

Google’s dream is to do the same with networking at it did with servers. Buy cheap commodity hardware and make resilient systems via software solutions. This strategy is directly in conflict with companies like Cisco or Juniper that focus on expensive proprietary hardware solutions. Google is trying to find cheap hardware in order to install Open vSwitch and other similar software on it.

Telecom operators and solution providers are wise to evaluate participating in the Open Source Routing effort. Verizon is one of the pioneers in trying out Openflow and the benefits it can have for carriers. Expect a lot of innovation from companies without a big brand to come in the coming months, examples could be bigswitch, fastly, pica8, etc.

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]…

Disruptive Innovations that can Kill the Telecom Industry

Killing the mobile broadband oligopoly

For years operators have paid billions for spectrum. Millions of man-years have been spent on building standards like GSM, GPRS, CDMA, 3G, LTE, etc. Can disruptive innovation kill this in a few years?

Yes, it can. The FCC is finding out that large parts of the USA are still not covered by mobile broadband. After years of lobbying by groups like the New American Foundation, the FCC has finally decided to start with White Spaces. White Spaces are also being rolled out in the UK.  White Spaces allows spectrum to be opened for public usage, which was previously used by analog television or to separate different adjacent channels. White Spaces have been referred to as “WiFi on Steroids”.

Another disruptive technology is software-radio networks in which mobile devices use software-driven radio technology instead of hardware-driven radio technology. This allows a mobile device to be compatible with different standards and to switch and evolve quickly. Putting software-radio in a mobile phone will make it possible to use dynamic white spaces, in-door networks, etc.

A final disruptive technology is Openflow. Openflow, is part of software-driven networks, in which routers, bridges, firewalls, loadbalancers, etc. are implemented on software-level. Networks can be virtualized and used with different QoS and configurations at the same time.

Google and Microsoft are major backers of the White Spaces initiative. They also control two important mobile operating systems. Google is also running pilots with fiber-to-the-home. Google has its own routers and other network technology.

Google could easily be the first White Space operator and use a Fon-like way to roll out their network.

Killing ARPU

SMS is already death, and it will be just a matter of months before operators will see deep dives in revenue. Apple could make the iMessage protocol public and Android could come with a standard iMessage-enabled solution and people would no longer send SMSes but would not even realize it.

Next one on the list are calls. Roaming is already seriously being challenged for years by Skype and others. Operators are planning for VoLTE, or voice over LTE, only by 2013-2014. However most will start rolling out LTE in 2012. This is the ideal situation for Voxtrot, and others, to use the vacuum to get people accustomed to free calls. By the time VoLTE will be available there might just be one market price for it: FREE.

Other value-added services, are already being substituted. MMS is called Twitter & Facebook mobile app now. PBX are now on the Cloud. Call centers are now offered as a service.

Killing ROI

Operators are pushed by the market to invest in LTE roll-outs. However why would you need LTE? There is not a single operator service at this moment that will make people queue up in front of their stores to get an LTE subscription. There are a million and one reasons in the form of mobile apps, mobile video streaming, social networks, HD Video-calls, etc. that can push customers towards the over-the-top-players.

So network investment is only going to rise and revenues from the new technologies will be meager at best, if not cannibalizing high-ARPU services.

With Mega Upload and other sharing sites being disabled, illegal file-sharing is not going to go away. P2P is likely to come back with a vengeance. It is easy to shut down large sites. However what if special encrypted P2P apps are used to distribute the location of content and botnets for distribution. There are a lot of computers that are connected to the Internet but are badly secured. Instead of using them for spamming, Mega Upload 2.0 services can use them to store and distribute content. As long as these “hacked” computers use HTTP(S), it will be very hard for operators to distinguish regular do-it-your-self websites from illegal content hubs.

Killing the operator’s established business model

Operators have educated subscribers that everything that comes from them has to be paid for. Disruptive operators like Free.fr are undoing this education by giving a lot of services for free when you pay the monthly subscription fee.

The Freemium business model is likely to find its way into the telecom industry. The model in which 90-98% of the users get the service for free and 2-10% generate the revenue by purchasing premium services. Combined with advertisement, this is the model of big successes like Zynga, Linkedin, etc. Disruptive players that adopt Freemium are likely to start offering services outside of their country borders since the more people participate, the better. With a winner-takes-it-all business model expect roll-outs to be very aggressive.

What can the telecom industry do?

The first thing operators should do it to tell their providers that their top problem is the lack of new revenues that will sustain the industry. Not LTE roll-outs, not fiber-to-the-home, not customer experience management, etc.

Telling telecom providers that new revenue solutions will be a top priority for 2012 will shift R&D budgets into the right direction.

The second thing operators should do is to stop using their existing purchasing techniques to try to generate new revenues. Nobody will be able to invest 5 months into an innovative solution, spend 3 months doing business development, pass 3 months on filling out RFIs, pass another 4 months filling out RFPs, 2 months on contract negotiations and 6-8 months on delivery. The industry can not wait 2 years to launch the first solution. Especially the herding nature of operators is making any introduction of new innovative services difficult because everybody wants a market leading solution but nobody is willing to be the early adopter.

The response should be different. Joint innovation teams that are able to break the “established rules”; that are able to launch “beta-quality” services to early adopters; that are able to innovate with both technology, business model and go-to-market strategy, etc. Operators should be embracing innovation and learn from the IT industry and even better the dotcom industry on how innovation is done quickly, efficiently and successfully…

Become your own mobile broadband operator

What if you had a gigabit Internet connection at home and you could connect a simple device to it and start to offer mobile broadband services without paying for the spectrum?

Four disruptive technologies and the support from a large disruptive player like Apple, Amazon or Google could make it possible in 2013. You could make money from instead of paying money for your fiber to the home connection.

Disruption 1: white spaces
FCC, the US telecom watchdog, is opening the US spectrum to unlicensed communications. The term is called white spaces. It basically means that unused spectrum can be used as long as you consult the FCC database and use an FCC approved device.

Disruption 2: Vanu
Vanu Bose is the son of the famous sound systems Bose. Vanu’s venture is about software-defined radio. It basically disconnects your mobile phone from the underlying radio technology.

Disruption 3: Openflow
I discussed Openflow before. It is one of the major standards for software defined networks.

Disruption 4: Cloud Computing
No further introduction necessary.

Bringing it all together
A white spaces compatible “mini base station” at your home that connects to the FCC database to get some local spectrum. Via the cloud and Openflow your nano operator network is linked to hundreds of other networks. A disruptive player offers Vanu enabled phones, e.g. iPhone 6 or Android Nexus Vanu as well as a monthly broadband subscription, e.g. €10 for 100gb. You download a database of “mini base stations”, their location and spectrum onto your phone. You are ready to go. Each time a phone connects to a “mini base station” a virtual network slice is setup (flowvisor / Openflow) and the owner receives money per Mb (nano payments). At the end of the month your Fiber to the Home subscription is paid for or you are even able to make money if you have enough traffic…

Network as a Service or NWaaS, Cisco beware…

The Internet would not exist today if it were not for Cisco Routers. However there is a revolution going on in the network. No longer are routers and switches the masters of the universe. Their virtual brothers and sisters are ready for war.

In the old days a network router would mean a complex hardware box that needs certified experts to get it working. I am the proud owner of a Cisco Aironet Wireless Access Point and man are those things hard to configure!!!

Two new technologies are here to change things: OpenFlow and Virtual Switches.

Both are part of a new domain that I call Network as a Service or NWaaS. NWaaS means networks at last have become cool and elastic again. Routers and switches are no longer independently taking decisions. Instead they will be submitted to “über”-controllers in the form of OpenFlow.

Virtual Switches are software switches that use software instead of hardware. A good example is Open vSwitch.  Virtual machines no longer connect with physical hardware. They connect with virtual switches.

The revolution has just started but having virtual switches and OpenFlow enabled hardware will make network designing and management a totally different activity. Combine this with the Cloud, Big Data and Computer Learning and tomorrow’s networks will need a lot less management and will be able to optimize themselves and completely reconfigure themselves multiple times a day or even more frequently…

How Fon could become disruptive?

Recently I wrote an article about Ryancom. I received a comment that Fon.com was already doing certain things like making broadband access available for free globally.

I want to take the opportunity to make some suggestions that would make Fon a really disruptive player.

Fon has some really nice residential WiFi routers. A basic version, the Fonera Simpl with an optional antenna, Fontenna, to reach more distance. Additionally there is the Fonera 2.0 N which allows a community of developers to extend the product with new functionality. Finally they can embed their software into operator’s existing WiFi routers.

Fon’s routers are based on OpenWrt, an open source Linux firmware distribution for embedded devices. Developers can create extra plugins / packages that can be deployed on the router.

How to make Fon more disruptive?

For many technical people having access to a global set of WiFi points all over the globe is a really good reason to buy a Fon WiFi. Unfortunately non-technical people might be lost in the technical details about how you can access somebody’s else Internet and might be scared of other people using their Internet. So for most people the Fon offering is like a vitamine and not really a painkiller.

By changing the value proposition of Fon towards becoming a painkiller for more people, Fon would be able to get more active demand for its products from consumers and also via telecom operators.

Fon painkiller example: Parental Control

Most parents would not care less which router is used to access the Internet. The only thing they know is that their offspring knows a hundred times more about Internet then they do. Additionally they know that Internet is full of dangers for kids and teenagers. Children always tell their parents they need Internet to do their home work. But reality is that most surfing is not done for homework 😉

So what if Fon would have an OpenFlow compatible WiFi router with FlowVisor combined with a Cloud solution. To spare the technical details, the summary is that parents would be able to partition their Internet access based on who is accessing. What would this bring?

Kids Internet – 3-8 year olds would only have access to a strict whitelist of Internet pages. Parents would not have to find this white page themselves. Instead people and companies could make white lists and parents could subscribe to them. Examples could be a Disney white list, a SuperNanny [the television show] whitelist. Parents would know that their young children could never go to pages that are unsuitable. Young children would have a start page with icons like the iPad in which they can click on the page and immediately go their favourite games or watch cartoons. Children could be limited in the time they can spend on Internet and special bonus points for good behaviour could buy them more time or bad behaviour could be punished with less time. Parents would need an “Apple” friendly interface to pick whitelists and set-up and manage Internet access times.

Pre-teens / Teens Internet – 9-17 years od – restrictions apply. Parents could define studying time slots in which only certain Internet content can be accessed, e.g. Wikipedia. Also here external entities could define whitelists. Time-based filters for open Internet access could also be set. Additionally special purpose filters are set-up, e.g. Facebook, Twitter, MSN, Skype, eMule, Google+ etc. This would allow teens to access Facebook and other sites but to have their behaviour screened. Teens could be prohibited to upload pictures of persons, share email/telephone or physical addresses, use F* words, access adult content, etc. There would be a dynamic firewall for each service. Parents could have a high-level reporting interface to see what their kids are doing.

Other painkillers

Parental control is just one example of how a generic router that is connected to a niche Cloud application could be a painkiller for parents. Operators could have other pain points, e.g. reduce botnets, spam, P2P content optimization, etc. Shop owners could have other pain points, e.g. social games for bars, etc.

A lot of possibilities are opening up if routers could be externally managed and very specific easy to use interfaces and solutions are build towards which communities and external companies can contribute and generate new revenue with.

The fact that every Fon router will give you access to a global free broadband network will be a nice add-on for most…

OpenFlow + OpenPipes + Cloud = Network Services 2.0

For those unfamiliar with OpenFlow and OpenPipes there is a nice set of videos. Especially this one is interesting:

 

Via visually dragging and dropping network configurations towards hardware devices, they can be reconfigured to offer special services.

What if this visual designer would be running in the cloud? What if it would be on a person by person basis?

Some really cool scenarios would be possible. Imagine that I could dynamically set-up VPNs between my hotel room and my home. Or between different family members. Or block content by person during certain hours of the day.

As a user I would be able to reach videos that I have stored at home and access them from a hotel room. Teens would be able to dynamically connect homes and play multi-role games without central servers. Parents would be able to blacklist their children from accessing certain content during certain hours. Children that say they need the Internet to “study” would be able to access Wikipedia but not World Of Warcraft from 17:00 to 19:00 during the week. There would be a million and one scenarios possible…

OpenFlow a standard for network virtualization

Virtualization for networks is going to be the next big thing in disruptive networking. There are already startups raising VC money e.g. BigSwitch just raised $13.75M. Another example is iwNetworks. It was only a matter of time before companies would think about virtualizing network resources. That time has come and there already is a standard in the form of Openflow (some videos). The expected route is that we will first see “normal network equipment” being virtualized for it to be followed by a new generation of virtual services that are really disruptive. Operators should be actively involved in this space because this can become a game changer if all of a sudden policy control and other types of network shaping technologies become accessible to the masses…