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Tuesday, February 28, 2012

UTC OTT @ MWC

Walk onto any voice & messaging vendor's booth at MWC and you will see the official, standardised clients and servers. VoLTE, RCS, interoperability gadgets and so on.

But look a bit closer, and have a quiet word with the staff, and you'll get a different story.

If you're not a roving secret policeman for GSMA, you might get shown the more interesting, samizdat goods that are kept "under the counter" for *special* customers....

They've all got a telco-OTT solution (or several). They just don't shout about it yet, mostly. I've seen 3 OTT visual voicemail solutions already, various soft phones and so on.

UTC OTT. Sshhh, don't tell anyone!

Friday, February 17, 2012

The telecom services federation and QoS paradox

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There's a painful paradox emerging for next-gen comms. I don't think the telecom equipment vendors quite realise its implications yet.

Vendors say that they can offer prioritised, guaranteed QoS for specific mobile services, if Net Neutrality laws permitted it. They could optimise YouTube, Skype, whatever, right down to the packet scheduling at the base station, and provide end-to-end quality guarantees.

Let's imagine that they're right.

Let's imagine as well, that laws permit this to happen.

If that's the case, why would I, as an operator exec, bother to run my own telephony service in a core network any more? Given that voice revenues and margins are going to fall anyway, wouldn't I just use a third-party service? Maybe a hosted, multi-tenant, "cloud" or UTF version of VoLTE? Why would I want my own, when I could spend the money on something new and growing?

At the moment, telephony is a bizarre industry, with 1000 local manufacturers of a commodity product, despite it having near-zero shipping costs. Each has its own small factory, with the only difference being a special sticker with a "number" on each unit produced, issued by a local licencing authority. Each factory can do maintenance on the units produced in one of the other factories, but charges them quite a lot of money for the work.

In most similar industries these days, you get big regional manufacturers, with huge warehouses and efficient distribution networks.

The two perceived barriers to this model applying in telecoms are QoS, and regulation (which is usually consumer-centric).

If vendors and operators *really* enable QoS for third-party services, they make the "local voice manufacturer" model look even more archaic.


As regulation catches up, we will inevitably move to more centralised production of "commodity VoIP", and the local players will have to revert to being "cottage industries" producing specialised "craft voice" services.

I don't think that vendors have quite woken up to the dilemma that the more QoS equipment they sell, the less standalone telephony and comms services infrastructure is needed.

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Will a maverick operator hijack the RCSe launch with a Telco-OTT alternative?

This post is brief, entirely speculative and rather mischief-making.

The next few weeks and months are likely to see a lot of coverage of RCSe. Whether it's ultimately successful or not (I still think not), there's presumably a decent chunk of marketing budget allocated by GSMA, the G5 operators, and presumably some device vendors.

In other words, the idea of "mobile instant messaging" and "video sharing" ought to be penetrating the awareness of many of those that have so far ignored BBM, WhatsApp and all the alternatives.

Now, bear in mind that the initial RCSe launch is likely to be along the lines of "It's available on a few brand new phones.... plus these ones if you upgrade the OS.... and also on the iPhone & unlocked Android devices if you download this app". We might also see a PC client or a web dashboard or even a Facebook plug-in or two. And because they all have to conform to the same underlying specs, there is likely to be a strong flavour of mediocrity.

But the interesting ones are in the second half of that paragraph. On an iPhone, or a PC, any RCSe app will look just like any other app. Probably on a lot of Android devices too, and maybe other smartphones as well. They'll be delivered from the AppStore, be usable over any data connection, irrespective of the access provider.

In other words, they will be #TelcoOTT implementations of RCSe - euphemistically known as "broadband access".

Now in theory, each operator issuing such OTT versions of RCS ought to do the honourable thing and stick to its own customer base. If you're on Orange, you get the Orange version of the RCSe broadband access app. Maybe get them to enter their phone number and send them an SMS with an authentication code if they're a subscriber, or (on Android) just limit downloads to on-net users. In other words, restrict access in a similar way to, say, a mobile data quota app today. In the same way, I can't download an AT&T or SingTel "dashboard" app and expect it to work on my phone.

BUT....

That's only by choice.

What happens if one of the operators decides to do something disruptive? And they *do* allow anybody to download their RCSe app, irrespective of network? They could launch a true OTT version of RCSe, at the same time as the wider market launch, exploiting the marketing budget, but sticking two fingers up at the concept of interoperability.

Imagine seeing the adverts for "Vodafone Messenger - available now for everyone on any network!", with a differentiated UI, some cool extra features that make the "vanilla" RCSe look weak, a clever social-marketing approach, web mashups and so on. If I was an operator looking to launch a Telco-OTT messaging app, now would be the optimum time to do it. I might even steal and edit the GSMA's line "It's just on the AppStore. It just works properly".

You remember those old cowboy or gangster movies, where one of the gang members suddenly turns on his compatriots, just when they thought they were all working together? Or spy movies, when one of them is secretly "working for the other side"?

The GSMA is trying to turn Barcelona into some sort of mobile-entertainment version of Hollywood. Will this be the first blockbuster with a "double agent" plot? You know what they say... the old stories are always the best ones.

Thursday, February 16, 2012

Press Release: Telcos versus OTTs: is it a phoney war?

[London, February 16th, 2012]
New study shows many telecom operators are also Internet players themselves

There are now more than 80 OTT-style Internet services run by telecom operators, according to a new study published by analyst firm Disruptive Analysis. The trend is accelerating, and represents a major opportunity for the industry over the next five years.

Dean Bubley
Dean Bubley
One of the loudest debates in today’s telecoms industry concerns the response of traditional network operators to so-called “over the top” (OTT) players. 

But a new report from Disruptive Analysis shows there is another option - Telcos can launch their own Internet-type services. Disruptive Analysis calls this a "Telco-OTT" approach.

“Telecom operators need to go on the attack,” said Dean Bubley, the report’s author and founder of Disruptive Analysis. “They must exploit the scale and ‘viral’ adoption of new services by billions of Internet and smartphone users, using similar tactics to the familiar web- or VoIP-type providers. It is no longer enough to rely on slow-moving standards or cumbersome collaborations. Telcos need to act alone, or with specialist technology partners”.

OTTs are companies such as Facebook, YouTube, Skype, WhatsApp and Netflix, which offer growing and profitable services “over the top” of raw Internet access from mobile or fixed telcos.

As Facebook’s recent $100bn IPO filing demonstrates, such companies are deriving huge value from applications that ultimately depend on operators’ broadband infrastructure. And this is happening just at the time when telcos are starting to see their traditional voice and messaging business flatten and start to decline (sometimes called “peak telephony”). The value in “services” seems to be shifting to the web.

Operators and their suppliers are trying to work out what to do. The usual suggestions include:
  • Charging customers extra to use such services, with data plans tiered by application type ("Personalise")
  • Throttling – or even blocking - applications at the network level ("Prioritise")
  • Attempt to extract money from "upstream" OTT players ("Monetise")
  • Competing through inter-telco collaboration on new standards like RCS / RCSe
But all of these options face challenges. Net Neutrality laws and various technology limitations stand in the way of application-based charging. Internet companies show little need or inclination towards paying for “quality”, especially on networks with poor coverage. Disruptive Analysis’ previous research has shown that RCSe’s success is highly unlikely.

However, according to a new report from Disruptive Analysis, many telcos already offer their own OTT-style services via generic Internet access. The study identifies more than 80 operator initiatives of this type, spanning four main service categories:
  • Content
  • Communications
  • Cloud
  • Connectivity
Disruptive Analysis believes that Telco-OTT enables operators to
  • Expand their user-base reach to a billion users or more, even in countries in which they have no network footprint.
  • Improving existing subscribers’ experience when they are “off-net”, for example helping them access their TV or voice services, from PCs or mobile devices connected via other networks.
  • Benefit from both new revenue streams and the higher equity valuations placed on Internet businesses.
Telco-OTT has its own opportunities and challenges. Few services are easy to monetise, and experiment (and sometimes failure) will be needed. But customers want open-Internet services – they like the choice and flexibility, and that trend is unstoppable. 

If telcos are to survive in the long-term, they need to embrace OTT, not fight it. If you can’t beat ‘em, join ‘em.

Tuesday, February 14, 2012

"Semi-OTT" extension services for telcos - less risky than full standalone Telco-OTT

Often, when I refer to Telco-OTT Services (Twitter hashtag: #TelcoOTT) people assume that I mean operators creating standalone Skype-type services, or running completely open social networks or web portals accessible to anyone with an Internet connection.

Yet while that is certainly a critical area for operators going forward, many are more cautious about stepping into the wider world of content or communications services, wary of the execution risks, software expertise required, and cultural dislocation to hit "Internet speeds".

A key intermediate step is what might be termed a "semi-OTT" approach. This involves extending an existing access-based, network-resident service out over the Internet, typically to existing access customers using different devices or in different places.

There are numerous sub-types and subtleties described in my new report but the most obvious two examples are:

  • Extending an operator's core voice and messaging services out to softphones or on-device apps
  • Deploying "TV anywhere" services which give access to home IPTV, from a mobile device
I'm not going to drill into the TV-anywhere trend in this post, although I will note that even Verizon has stepped into that fray recently - and point out that the OTT play is a bit less controversial, as fixed IPTV and cable operators usually only play regionally, so extending reach seems "natural".

The voice and messaging extension is more disruptive, as the services tend to look "Skype-like", at least for existing subscribers. There are numerous sub-types of proposition here - PC vs. smartphone apps, full VoIP vs. "dial-through", WiFi vs. 3G connections, consumer vs. business, roamers vs. domestic and so forth. Some are driven by fixed operators, some by mobile, some by hybrid providers. UMA could also be considered distant relative of this type of thing, as it worked as a Telco-OTT service extension technology, albeit without full VoIP. The report goes through a selection of variants in some depth.

Even with VoIP and SIP, there is some history here back to 2006-2007 and some early attempts at FMC (fixed-mobile convergence - remember that acronym?) from companies like BT (Corporate Fusion) and Telekom Austria (A1-over-IP). To be fair though, none exactly set the world on fire at the time.

The more recent examples of Telco-OTT Voice & Messaging Extension services are more polished, however, exploiting better smartphones, HTML5 browser apps, better UI designs on touchscreens & faster processors, improved SMS integration, faster & more prevalent broadband and WiFi, and so on.

The latest one to emerge is Rogers' OneNumber in Canada, laptop-based, powered by CounterPath's software and hooked into an existing IMS core network and using an existing mobile number. There's a good write-up here[disclosure: CounterPath is a client of Disruptive Analysis]

It is highly noteworthy that Rogers has gone for a proprietary OTT extension to IMS. In my mind, this makes MUCH more sense than trying to use a standardised client such as RCS or VoLTE.
  • Firstly, it's faster to market and doesn't need protracted rounds of negotiation between local operators. The telco has the choice to start with PCs, smartphones, featurephones, WiFi or whatever depending on its local conditions and can get started without waiting for the standards bodies to catch up
  • Secondly, it can use a variety of best-of-breed components - browser-driven vs. app, acoustic elements like codecs that are the operator's choice and so on. The UI or UE is much more customisable, for example with aspects like "friend invitation" and presence.
  • Thirdly, it exploits the cloud for doing interoperability only where the operator wants and where it makes commercial sense. Sometimes, interop can be blocked for marketing and competitive reasons (the video-call aspect of the Rogers service is on-net only between subscribers). The cloud platform can also do security, transcoding and so on.
  • Fourthly, the operator can make various "controversial" local partnerships - for example with Skype or a foreign operator if they choose.
  • Fifthly, it makes working around local preferences for numbering, identity, interconnect rules more flexible. For example, a Middle-Eastern telco might want to use email or password/PIN as a login, as many users keep mobile phone numbers strictly private.
  • Sixthly, it doesn't require extending IMS down to the device. This means it's usable on non-SIM devices, competitors' phones, it's not hard-coded into the OS or chipset, it can be easily removed or updated or debugged - it looks like any other app or browser client, rather than tightly-integrated telco bloatware.
In Rogers' case it looks like the deployment is slick but relatively conservative (as I'd expect from Canada - a market where 3-year mobile phone contracts are still common) but it will be interesting to see how it evolves. It appears to be intended to displace some users' Skype/SkypeOut use when on their PCs, by giving better experience for SMS and more free calls. The GigaOm article speculates about a Facebook-embedded version similar to T-Mobile US's Bobsled, for example. I'm curious to see what a smartphone or tablet version might look like.

One of the things I'd note about services of this type is that localisation is very important. So for this example, outside the US, the PC-to-mobile call switching concept might encounter problems from regulators, as interconnect fees depend on whether termination is on a fixed or mobile device / number. In the US and Canada, there isn't the same distinction in numbering or termination fees. Other regional variations will reflect Net Neutrality rules, the prevalence of WiFi, demographics of laptop ownership and so on.

I think that this type of "unilateral" service innovation using OTT-style components is far more likely to succeed than the "forced ubiquity" seen in new standardised service platforms like RCSe. As I pointed out the other day, the lowest-common denominator approach is likely to fail - and may even accelerate damage to core voice and messaging revenues if badly implemented. 

Sunday, February 12, 2012

Mobile broadband traffic volumes: Watch out for dodgy offload & optimisation claims and stats

The next two weeks are going to be uncomfortable for a lot of "mobile data traffic management" vendors. Whether they have WiFi offload solutions, video optimisation offerings, small cells, policy enforcement boxes, charging and "personalisation" platforms or various other bits of network-control machinery, they will all have to think carefully about their pitch for MWC.

The problem is that the (in)famous scissor diagram of diverging mobile data traffic and revenues, that we've all seen 1000 times..... seems to be wrong. Increasingly, we see evidence that it looks more like a pair of pliers, with the lines curving back together rather than expanding exponentially away from each other, especially in more mature markets.

Now I'll be the first to say that the "big" number of TB, PB or EB delivered doesn't tell you much about actual busy cell / busy hour congestion, but it's still an interesting data-point, especially as it is so central to  many spectrum-lobbying and solution-marketing arguments.

We're in the middle of financial reporting season for telcos, and so far we haven't seen much hand-wringing about unsustainable traffic growth this time around. Vodafone's 20% data growth matches its revenue growth. AT&T's is down to about 40%, far less than it predicted in its FCC filings for its for the ill-fated T-Mobile acquisition.

Telefonica and other operators' results are due soon too. Then we've got the new Cisco VNI study and forecast out this week (I'm expecting a downgrade of its mobile data forecasts), and at some point we should get a full-year 2011 report from Ericsson & Akamai as well. The last two updates have shown different patterns - 8% Q-on-Q growth for Q2 rebounding to 18% in Q3 with the note that there are "large differences in traffic levels across markets and regions".

To be fair, it's still too early to tell if flattening data volume growth in more mature markets is a major trend, or a temporary one-off blip/correction as many operators shift to tiered plans. Yet other factors are also in play - especially WiFi use, as well as some in-network policy and optimisation.

So if the "tsunami" has indeed receded, then a few things will occur:

  • Every single vendor will claim "See? It was us that saved the world!" and give some form of data as supporting evidence, rather than admitting the problem was overstated in the first place
  • If you add together all the "we saved 20%", "our solution saved 40%" claims, we should be back at zero by now, or even negative traffic.
  • The marketing will stress "If you don't carry on buying our solution, congestion will reappear again tomorrow, even worse than before"
  • There will be 10x more emphasis on network-resident kit having solved the problem, rather than simple pricing plans (or wider free WiFi availability, or better-designed apps) changing user behaviour
  • There will be 20x more emphasis on traffic "tonnage" than on signalling load, even though for many networks that its *still* much more of a real problem
  • Lots of vendors will overlook the fact that most traffic on many networks still comes from laptops rather than smartphones.
  • There will be subtle digs at the other options, as vendors realise that the operators don't really need ALL the solutions they are being pitched. Expect "WiFi offload is more cost-effective than optimisation", or "Adding extra radio resource with small cells is easier than messing around with complex policies", or "Dynamic pricing & charging by user profile is better than trying to guess applications with DPI"
Most of all, though, we will see a broad range of highly questionable stats ("dodgy", in English English), especially in the PR bombardment at Barcelona, when a big slab of hyperbole is often necessary to get attention from the media.

Offload is probably going to be the biggest culprit. I'm expecting to see a lot of hype from vendors and WiFi aggregation providers claiming that X% of data traffic has been offloaded on Operator Y's network, saving $Z in incremental capex/opex.

The key question to ask (especially if you are at an operator) is "What % of total WiFi traffic do you think is actually genuine offload?". As the chart below illustrates, smartphone WiFi is much more than just offload. There is also

  • Baseline private WiFi use driven by the user, which was never intended for 3G/4G use
  • "Elastic" WiFi use, where offload actually increases total volumes compared to what would have been done over cellular. I've heard a suggestion from an operator that this can lead to a doubling or trebling of total usage.
  • WiFi Onload, where a third-party operator diverts traffic to its WiFi and away from a rival's 3G/4G, in the hope that it can use the channel for extra services like advertising or location-specific deals (eg O2 WiFi)
  • App-driven WiFi (not on the chart), where a specific application drives WiFi connectivity and choice of access (for example, Skype's tie-up with Boingo, or Sky TV and its WiFi network The Cloud in the UK)


Also, it's important to think about laptop MBB differently to smartphones. Many laptop users "onloaded" to 3G only because there wasn't enough WiFi about to begin with. Increasingly, there is available WiFi, so they're not really "offloading", but merely going back to what they hoped for in the first place. A subtle difference, but important as it may mean they abandon dongles completely at some point.


A couple of discussions I've seen on Twitter and elsewhere suggests that "elastic" and some portion of private WiFi might get counted as "offload" to pump up the stats. Caveat lector....

We may also see some numbers from the video optimisation vendors, about the amount of traffic "saved". Those numbers are perhaps more realistic (ie volume in vs. volume out), but it's also important to understand "volume the user didn't bother with in the first place" with behavioural change from pricing shifts.

And of course, that's the problem. None of these things is truly independent. There are lots of feedback effects, accidents of user demographics on specific networks, impacts of shifting mix of devices - and perhaps, the impact of application and content providers doing their own "self-optimisation", for example with adaptive bitrate streaming.

Ironically, however, the main real underlying reason for flattening data growth is Cisco's VNI mobile data forecasts numbers themselves. They have been so scary, used by some many people, and seen so many times, that they seem to have prodded everyone else in the industry into action, to make sure they didn't come true.

In other words, the most important technology involved in mobile broadband traffic management is probably Microsoft Excel.

(If you found this post interesting, please sign up for the email list at the top of the page. I'm also @disruptivedean and @DApremium on Twitter)

Friday, February 10, 2012

The death of communications "ubiquity" - and why the GSMA has got it wrong on RCS & VoLTE

Overview

This is a long and important post about the future structure of the telephony, messaging and communications services business. It argues that "ubiquitous services" are a thing of the past, and that the telecoms industry needs to embrace fragmentation, not fight it, in the future.

It leans on the work I've been doing on my Telco-OTT report, my recent advisory work with operators and others, as well as the findings that I've learnt during my Future of Comms events & operator engagements with Martin Geddes. (Sign up for our newsletter here)

It covers:
  • The history of telecoms ubiquity
  • Why fragmentation is happening now
  • The user appeal of "silo" services
  • Why service standardisation can do more harm than good
  • Why RCS & VoLTE may hasten the demise of the traditional operator model
  • What can be done by operators about communications services
But first, let me set something straight.

I make a sizeable % of my revenues from mobile operators and "traditional" telecom vendors. I do not dislike them, nor do I want to see them go out of business. I'd like them to continue having the need and means to pay for my services, as well as the funds to build out faster and better networks.

But that doesn't mean I'm a cheerleader, especially when the telcos sometimes act collectively like a herd of ostriches. It is in my own long-term interests to see the telecoms industry maintain its health, and so I'm unafraid to make some hard calls in the short term when I see imminent strategic mistakes.

I also certainly recognise that large organisations harbour many different opinions and initiatives, and I meet as many clued-up and insightful operator employees who I respect and learn from, as I do relics of the telecom Jurassic period who make me shake my head in bewilderment.

The history of telecoms ubiquity

Perhaps the largest failing of many I encounter in the communications services industry is their belief that "ubiquity", "standards" and "interoperability" are always more desirable (and profitable) than "niche", "proprietary" and "silo" as service attrributes.

If anyone has any doubt about this, consider how a "niche" provider of "proprietary" mobile phones & computers now makes enough money to significantly alter the overall profitability of corporate US as a whole, while another "silo" provider has just filed for an IPO that would comfortably put it in the list of the Top 10 telcos by market cap.

Clearly for some organisations, ubiquity is far from essential. So why is it still taken for granted in telecoms?

This "standards first" mentality is most damaging in the area of personal communications - specifically around voice and messaging services. It is often taken for granted that "ubiquitous" services or applications are inherently better than more tailored or niche alternatives.

Now it is certainly true that we have a number of successful, useful and ubiquitous services today - telephony (fixed and mobile), SMS, and (for all intents and purposes) MMS and email. I am excluding "Internet access" as that is a connectivity service rather than an application.

Clearly, taken together (especially telephony and SMS) we have a huge precedent for ubiquity being "good". They generate getting on for a $trillion per year worldwide. We also get a warm and egalitarian feeling from their democratic nature  - everyone can have them, whether they have a $20 phone or a $1000 super-device. Against that backdrop, it's easy to see why people hope to find the "next ubiquitous service".

It is also easy to see why organisations such as the GSMA are so emphatic about re-inventing and promoting "ubiquity" as a principle. It has had a hugely successful history, and they would like to perpetuate that trend - both in terms of democratisation of communications for users, and in terms of control and profitability for their members.

But the problem is that from now on, Ubiquity is Dead in telecoms. Unfortunately, the telecoms past is not a reliable indication of how the future will evolve. New services can never become ubiquitous again, while the existing ones will slowly, but steadily, die. (See Martin Geddes' fantastic article on "peak telecoms" for more).

That's not all. Not only is the age of ubiquity over, but attempts to "force" ubiquity may well backfire and make the fragmentation and cannibalisation worse and faster. Such attempts are inherently "brittle" and will lead to unsustainable tensions that will at some point break down catastrophically, rather than gracefully.

 
Why fragmentation is happening now 

In a nutshell, fragmentation of communications services is happening "because it can". 

The history of the telecoms industry has been about standardisation and ubiquity (at a service level) because of the costs and complexities involved in bringing new applications to market. They have needed to be hosted in the network, "hard-wired" into dedicated boxes, linked to complicated billing and OSS systems. The phones were essentially "dumb endpoints" with no ability to host much application logic themselves.

Also, historic regulatory structures have tended to drive national regimes for licencing, numbering and interconnection, fragmenting the providers of a few well-defined services to provide competition, rather than encourage competition between services. That is unsurprising, given the technological limitations of the past. In Disruptive Analysis' view, there needs to be some significant regulatory evolution to cope with the new landscape.

The old backdrop has now changed because of multiple trends and drivers:

  • The growing base of open smartphones and appstores allows easy distribution and installation of 3rd-party mobile communications applications 
  • Home PC & broadband penetration catalysed the initial growth of popular new communications services, that have then reached across to the mobile domain (webmail, IM, social networks, PC VoIP etc).
  • The general trend towards “cloud” is catalysing the separation of application hosting and network access.
  • Operators are starting to de-layer into NetCo and ServiceCo divisions anyway, either because of regulatory intervention, or by the direct entry of new wholesale-centric "UTF" (under-the-floor) operators that are forcing separation through competition.
  • All-IP networks – and especially LTE – are forcing a range of decisions to be made now about future operator-hosted applications and supporting infrastructures.
  • There is growing awareness that “telco grade” QoS is not always the pre-eminent driver of customer adoption, or arbiter of communications excellence. Some customers will accept lower network quality in exchange for higher experience quality, for example through clever web-based interactions. Facebook and Skype exemplify this.
  • Software and development tools and techniques have improved massively, along with supporting capabilities such as Amazon cloud platforms to host scalable applications.
  • CFOs are aware that much of the value creation in the communications and Internet industry has been driven by asset-light, rapid-growth services such as Google or GroupOn. They want to capture some of this capital growth for shareholders, even if it does not fit traditional revenue/margin business models.
  • WiFi allows a variety of communications services to circumvent operator visibility and control, exploiting fast and low-latency IP connections.This then seeds the market with applications capable of using HSPA+ and LTE networks when they reach the necessary quality.
  • A few "non-Internet" OTT services have also emerged - notably BlackBerry Messenger (BBM) and various corporate VoIP/UC products.
Taken together, these mean that innovation - and fragmentation - of communications products has accelerated. Companies like Viber and WhatsApp have been able to emerge with tiny amounts of funding, creating improvements on legacy standardised alternatives, and benefiting from viral adoption and social media word-of-mouth. Even if a new standardised service is temporarily popular, it will need to "run just to stand still" as otherwise users will churn to newer, cooler alternatives.

The user appeal of "silo" services

The generally-accepted assumption in the telecoms industry is that end users always want ubiquity. Services need to work everywhere, on every platform, for every user. Isolated or proprietary “islands” are seen as impediments. Ideally, services are standardised and adopted by all operators. Stories abound of how SMS only “took off” after it become possible to send messages across networks, or how "everyone just wants to pick up the phone and call someone".

But this assumption needs closer scrutiny. Users do indeed want some services that work over all access networks but they also seem to be happy to tolerate access-neutral service islands – even where there are other constraints such as lock-in to specific device platforms.

Experience seems to prove that users are willing to tolerate (or embrace) fragmentation in messaging in particular – many see it as a benefit, in compartmentalising their groups and slightly-different modes of engagement. Users seem entirely at ease having multiple IM and email accounts, SMS/IMS, Twitter, Facebook, BBM and so forth. Disruptive Analysis believes that the same will happen with voice capabilities – they will fragment and multiply, absorbed into multiple applications and web services, rather than just being “phone calls”. Apple’s Siri is a good example of this.

The population is getting much better at multi-tasking and segmenting its communications experience. Many users have multiple IM addresses, logins, devices, numbers and other identifiers. Despite the industry bodies crying wolf about the dangers of losing ubiquity (or trying to converge the various apps with aggregation layers), this is not a "tragedy of the commons" scenario. 

Fragmentation often adds value and consumer utility, rather than reduces it.

Customers seem highly able to find the application(s) which precisely fit their needs and price/quality points, even if they don’t have the same level of ubiquity and interoperability seen in the traditional telco world. In some cases (eg BlackBerry Messenger), a lack of ubiquity has counter-intuitively been re-framed as desirable exclusivity for example.

In the past, 99% of human "distant" communications has used a few standardised models - telephone calls, SMS, email and so on. 

Now, the picture is shifting. For maybe 80% of communications, there are now better or cheaper tools available - especially among closed groups such as friends or employees. "Ubiquitous" services are being downgraded to being just a fallback. If I want to invite 50 friends to a birthday party, I'll send 48 invitations via Facebook, and the other two by SMS to the recalcitrant non-users. Similarly, once in a while I'll make an old-school phone call for a pizza, as the restaurant isn't a "friend" on Facebook or a contact on Skype.

The problem is that for the telcos, the standardised services (old and new) are still expected to be primary channels, not just the secondary option, or lowest-common denominator.

In other words, new services need to be either
  • The best primary option for a given use-case (& to stay the best through regular updates)
  • The cheapest fallback as a compromise, when none of the preferred silos works

Why standardisation can do more harm than good

But even if we accept that services like iMessage and QQ will take a good share of the "optimised communications" market, surely it makes sense for the industry to at least try to create new ubiquitous services? Like, to name a couple of examples, RCSe or VoLTE?

On the face of it, that sounds like a smart solution. If it doesn't cost that much to try for a collaborative, standardised solution, then what's the harm in trying?

And that's where the problem lies.

In my view, failed attempts at creating ubiquity may in fact be worse-than-useless. There may be additional damage caused to operators' legacy revenue streams and customer loyalty, above and beyond that which will happen anyway.

For example:
  • Some new services will be integrated with existing telephony or messaging. If the new experience is poor, then usage of the older services may drop too, and the user may investigate alternatives more thoroughly. For example, mid-2000's phones which put 3G videocalling above telephony in menus caused significant user resentment.
  • Users may opt for devices that do not feature the new "forced ubiquity" services - for example unlocked $100 Android phones, or Apple devices. They may also "root" or jail-break operator-supplied devices with different software stacks
  • One or more operators may pull out of the GSMA/3GPP model unilaterally (for services, not underlying network access) leading to a crumbling of traditional models in an unpredictable fashion - perhaps through removing SIMs from the value chain and moving to alternatives (eg Soft-SIM)
  • Operators may be forced into infrastructure investments that are expensive or cumbersome (eg full IMS implementations). They may also delay investment in LTE or migration of users towards it, while they find alternative voice and messaging solutions.
  • The time and effort wasted on failed "ubiquity" projects may have impacts beyond the upfront costs. Delay may mean relinquishing other opportunities, a reduction in work to enhance "old" services, and also allow other companies to further overtake the telcos and dictate events and pricing.
The problem is that services designed to work in a ubiquitous fashion often work poorly in a non-ubiquitous context. They're perfect at 100% compliance, useful at 90%, OK at 80%....but then below that, they rapidly become a liability, especially if they get in the user's way in the device UI. At 70% "ubiquity", the chance of any two users having the capability is 49%.

Conversely, services designed as silos typically have mechanisms to cope with that fact. They have sophisticated "invitation" mechanisms, APIs for importing and exporting communications if needed (eg SkypeOut / SkypeIn), or are intended for specific niches and communities. Their makers expect them to exist in a convoluted world - and even Facebook and Google aren't arrogant enough to prohibit their apps from being deleted or uninstalled.

Why RCS & VoLTE may hasten the demise of the traditional operator model

In two weeks' time, MWC will launch a huge upsurge of talk about the GSMA's favoured RCSe and VoLTE programmes. We might even get the long-delayed launch of the Spanish RCSe service, rumoured to be called Joyn. 

For the reasons above, I think that RCSe in particular is one of the most damaging and divisive services that the telcos and their vendors have proposed. It is a huge and unnecessary distraction at precisely the wrong time. It has numerous flaws in design and conception, and in any case will have (at best) patchy acceptance by vendors. It is too little, too late, and in the wrong direction anyway. The industry can't even decide if it's supposed to compete with Internet-OTT players or complement them.

Worse, the approach by the GSMA is somewhere between strident and delusional, with a side-order of bullying.The mantra of "it's just there, it just works" has been trumpeted loud and long, but is entirely the wrong concept. There is a transparent attempt to pitch RCSe as a "fait accompli" in the hope that more operators will sign up, for fear of being left behind. 

That approach can most charitably be described as "fake it 'till you make it"

Firstly, it isn't "just there" on all devices - the iPhone implementation will be app-based as Apple is unsurprisingly unwilling to implement it natively, as it would compete with its own communications products such as iMessage and FaceTime. It's unlikely to be in the native Android stack but implemented by OEMs on certain specific phones. Its relationship with RIM and Microsoft remains unclear (especially its fit with/against BBM and MSN/Skype), and it seems improbable that "vanilla" featurephones for the prepay market will integrate all the software, unless the manufacturers are convinced it will sell more devices. Even Samsung, a supporter, will have to position RCSe carefully against its own ChatON service.


In addition, the attempts to strong-arm manufacturers by getting handset certification rules changed at the GCF, or specifications adopted at OMA, look like a triumph of power over consumer demand and "ecosystem good practice". Such moves appear Machiavellian - they put the "cart before the horse". When/if RCSe has proven itself to be liked by users and successful, then it is the time to entrench and optimise it.


Worse, the effort to embed RCS capabilities low-down in the device "stack" will  make it difficult to update (or bug-fix), and possibly unable to be deleted or removed by users if they decide they don't like it. Keeping a disliked and possibly invasive feature front-and-centre on a phone is a good way to breed user disloyalty.

VoLTE is a bit different and will probably emerge to the market in some usable form - but likely later than anticipated and only by some operators for some users. Also, the timelines are a bit different - it won't be deployed (in most cases) until LTE coverage is good enough, while the SR-VCC mechanism for handoff to circuit-calls has only just been lab-tested. By that time, it should be apparent to all that phones will have multiple voice services (not just telephony) and so hopefully it will be implemented to be a "good citizen" in the company of various other apps. 

There is also much less rhetoric about VoLTE being "ubiquitous" - except in some vague, "middle of the 2020's utopia" sort of fashion. Apart from anything else, the telcos know that it will have to coexist with 2G and 3G circuit-only phones, as well as various flavours of VoIP. That said, if early implementations are problematic (eg poor voice quality or battery life) they will hand the battle to Microsoft/Skype or perhaps one of the new Telco-OTT alternatives. But that is a different issue to the "forced ubiquity" weaknesses of RCSe

What can be done by operators about communications services?

On a recent call with an operator strategist, a point was made to me that telcos increasingly need to be "portfolio managers" rather than being focused on traditional single-product metrics. This is absolutely the case for next-gen communications services around voice and messaging (and also video).

The winners in this space will be the ones which acknowledge that they are not the only game in town, and which aim to gain traction gradually, and alongside others, pulled along by users actually liking the service and its ongoing iterations. Designing and solidifying a platform technology, before getting real customer feedback on early service implementations is foolhardy

Designing the mobile IMS architecture before services like RSCe and VoLTE get wide user acceptance is a 1970s-era view of telecom service development. RCSe should have been designed as an OTT-style service first and then when it met user demands (and was embraced enthusiastically), it could have been "platformised" later. Given that there are various RCSe-type OTT options (eg Metaswitch Thrutu) it is perhaps not too late. 

The GSMA and the G5 operators urgently need to drop the claim to ubiquity for RCSe, ideally before Barcelona. Facebook's 400m+ mobile users make them look foolish - if reach is the critical indicator of success, they have already lost the battle. The claim in various RCS slide-decks that it's somehow difficult to to install 3rd-party services is even more risible: it's much easier than going to a shop to buy a new RCSe-capable phone, while the operators themselves will be depending on that much-derided model for iPhones and existing Androids. 

Even "it's just there" is empty rhetoric, when even prepay SIM cards can work out-of-the-box with OTT services like BBM, while it clearly won't be "just there" on iPhones at least, and probably many other devices. And let's wait to see how RCSe actually operates in the user's hands before we claim "it just works....", when we know if the fourth word is "well" or "badly". If it's the latter, it will do the operators more harm than good.

My view is that proponents of RCSe should forget about "ubiquity" as a driver, and instead focus on specific niches or use-cases, and evolve the service over time based on user feedback. Because this may be country-specific, it should also move away from the multi-operator interoperability model, and towards a Telco-OTT basis. It may be that Vodafone does something clever with RCSe implementations that Orange does not. It could be that we each end up with three or four different RCSe-OTT apps on our devices if they're done well.

Operators should be thinking about specific use cases and service "look and feel". They should absolutely have a long-term aim to launch services that could reach a billion people or more eventually, but should not try and leap straight there on the first iteration. They need to adopt Google's approach and try services like Wave, Buzz and Google+ and be prepared to kill them and move on if they don't work. 

Creating binary "unkillable" services that can only ever be ubiquitous or entirely absent is an existential mistake. Given what's going on in the industry, trying to create "forced ubiquity" will likely accelerate the movement towards "total absence".

Economists might want to think about an unfortunate parallel here, with attempts to force a certain "ubiquitous" currency on a diverse group of nations, leading to a possible "disorderly breakup" when one defaults on its debts, with "contagion" taking down the other dominos via "interoperable" holdings of debt by banks. 

When the first major operator "defaults" on the 3GPP/GSMA world-view, the outcome will not be pretty either.

So for telecoms, ubiquity is dead from here onwards. Even if RCSe miraculously succeeds, its most optimistic destiny is to become the lowest-common denominator fallback when nothing else better is available. The sooner telcos, their vendors and the GSMA admit it, and embrace fragmentation and flexibility, the sooner they can hope to recreate their role as services providers of choice. 

Whether operators partner with Internet companies or each other, acquire promising Internet startups (eg Viber, Tumblr, WhatsApp, Pinger, Path, Yammer etc), or build their own Telco-OTT services from the ground up, an acceptance of "communications diversity" is a non-negotiable starting point. 

They need to find best-of-breed communications apps, because the value is going to shift permanently. "Ubiquity" = "lowest common denominator" = "minimal value".

(Disruptive Analysis has recently published a report on Telco-OTT Strategies. Click here for more details)