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Thursday, May 31, 2012

Updates on VoLTE - secondary not primary voice?

Unlike my criticisms of RCS (which I think was a lousy idea to begin with), I've always been broadly positive about the concept of VoLTE and its predecessor OneVoice. Indeed, I wrote a report in 2007 saying that operators urgently needed to develop a standardised form of basic VoIP telephony for 3G/4G networks.

However, that was 2007. The year the iPhone launched. VoLTE development is now running 4-5 years late, and the mobile world has moved quickly in that period.

A central theme of the report was that operators needed to "practice" with VoIP with HSPA networks in 2008-9, before being forced into using it with LTE. I argued that deploying a new voice technology, on a new network, with all the inter-dependencies and complexities involved, would be too difficult. Understanding the vagaries of mobile VoIP quality needed to be done without the distractions of simultaneously learning how to optimise the radio network itself. 

VoIP quality is a completely different ballgame to circuit voice - even on a well-managed ethernet corporate LAN, let alone a brand new wireless network. It fails in different ways (glitches and so on), has lots of on-device requirements in terms of UI and acoustics, and various challenges with interconnect, service assurance and maintenance. It also needs a way to hand off calls to/from 2G and 3G networks reliably.

One of my suggestions was that operators could use VoIPo3G for assorted less-demanding "secondary" forms of voice service, while leaving "primary telephony" on circuit-switched networks until they'd learned the tricks of the VoIP trade.

It looks like I was right. Verizon Wireless has long been at the vanguard of VoLTE development and testing. In February 2011 it indicated a mid-2011 for VoLTE. Subsequently - and to my complete lack of surprise - it has been pushing back the date. I've heard from various private sources that my assertion that VoLTE would be "harder than it looks" is  right. 

The VZW CTO has now been quoted as saying that the company is "not rushing it", and that full (primary telephony) VoLTE is probably going to be late-2013 / early 2014. Interestingly, in the meantime it looks like they might instead go for the "secondary voice" option, bundling some form of VoIP (and I guess maybe video) into a new communications client along with US-flavoured RCS.

If that happens as planned, it's a very interesting move, because:

  1. It's a proper admission that mobile VoIP is *hard* to get right. That's good because it means the scale of the problem has now sunk in.
  2. It means operators will have a stake in the "secondary voice" game, perhaps meaning that they now realise voice is about "more than telephony". It will be interesting to see if the new voice apps come with developer APIs, different user "journeys" such as call-invitation rather than interruption and so forth
  3. It means that operators will be prepared to admit to users that having 2+ voice apps on one device can work, and that "ubiquity" isn't necessary. Most users know this already if they've got Siri or Skype or Viber, but it's quite something to see confirmation from the Establishment.
  4. There seems to be recognition that the world is not standing still waiting for VoLTE to be ready for prime-time. Every month's delay is a month that Skype and its dozens of rivals get better at running 3rd-party voice apps over 3G/4G networks - and a month in which users get habituated to them. Therefore operators either need to do "something" with beta-grade VoLTE, or go down an alternative OTT-style route.
  5. It looks like the operators - in the US at least - will try to stick to a "federated" model for mobile VoIP rather than doing a #TelcoOTT . Although maybe some will follow Telefonica's lead and back both horses.
The last two points are worth revisiting. The idea of "hedging" is one that seems to be taking hold in telecom operators. I had senior representatives of both  Deutsche Telekom and FT/Orange on my panel "Operators vs. OTT" session at the Open Mobile conference the other day. Both suggested that it "wasn't a black and white situation" and that there was scope for various forms of grey in partnerships, Telco-OTT services and so on. I'd goaded them a bit with Telefonica's recent bold moves with TU Me and other services, and the response surprised and impressed me. They're prepared to try multiple options for voice and messaging, probably targetted at different customer segments.

My question is whether operators have the management and governance (and resources) to back multiple horses - and also whether they can still say "It's just there, it will be ubiquitous" while simultaneously planning another option if it isn't. I'm not sure if anyone has ever devised a version of the Prisoner's Dilemma in which the inmate tells different stories to two different prison guards, but that's what this sounds like. If any game-theorists would like to comment, I'd be very interested.

There are also some interesting challenges if we have VoLTE for secondary voice - such as how it interacts with the primary voice user experience. Which takes priority for incoming calls? Do both feed into the same call register? Do you have a number (and if so is it the same?). Does it work over WiFi? It'll be very interesting to see how that UI is managed, especially if there are also 3rd or 4th voice apps on the device from someone else.

I also had  another Open Mobile session on 4G, with  an EVP from Tele2 and the CEO of Everything Everywhere, while the head of mobility at Teliasonera had a keynote. None of them sounded particularly excited by the imminent arrival of VoLTE either, expecting it vaguely "next year". A common theme seemed to be that circuit-switched fallback "should" be good enough, although there's a conspicuous lack of data about uptake or user-satisfaction for CSFB.

Fitting all this together with a comment I'd seen in a GSMA presentation a few months ago - that VoLTE would be "massmarket" in 2014 - and an interesting picture emerges. We're about to have at least two years where mobile operators are going to be forced to do interesting things with voice, because primary-telephony VoIP isn't ready yet.

The one operator that leaves in the cold is probably MetroPCS, which seems to have been banking on VoLTE being mature this year, and which is probably in greatest need for it as it has capacity headaches for circuit. It will also be interesting to watch what the Asian LTE operators do - my guess is stick with CSFB or perhaps revisit the dual-radio idea already seen on CDMA/LTE phones.

Lastly, I've seen a couple of things about VoIP on HSPA (notably from Qualcomm), but that seems to be positioned as a follow-on to VoLTE, allowing use of full mobile VoIP in areas with no 4G coverage, without the extra horribleness of SR-VCC handovers to circuit.

Friday, May 11, 2012

The telecoms industry and a dual-dilemma problem

I had an interesting late-night Twitter spat with Keith McMahon last night, about the appropriate future model for telecoms operator strategy. He disagrees with my stance on Telco-OTT (operators launching their own pan-Internet services) and reckons that it will accelerate "value destruction". I'm adamant it's inevitable even if it does imply cannibalisation and revenue decline taken at a macro industry level.

Thinking about this more today, I've realised that my view can be explained quite simply. The telecom industry is (as far as I can tell) the first to face two classical "dilemmas" simultaneously:

  • The Innovator's Dilemma: The title of Clayton Christensen's seminal book on disruptive innovation (from which I take a great deal of inspiration, including my company name). It refers to well-managed, profitable companies watching disaster unfold, as they ignore a low-cost / low-profit new technology because it targets only adjacent markets, and would threaten cannibalisation if applied to their own. But it improves over time, gaining strength and scale, and eventually kills them anyway, as it expands from adjacencies to core.
  • The Prisoner's Dilemma: This is a famous thought-experiment applying "game theory" to collaboration and cooperation. Do two prisoners remain silent & complicit - both receiving short sentences - or does one frame the other, going free while the other languishes in jail? Or, if both try to betray each other, they both get long sentences. (Edit: Martin Geddes has pointed out the different game if you change the apostophe to prisoners' dilemma)
The parallels in telecoms should be obvious. IP communications, new styles of voice & messaging, and smartphones are the disruptive innovations, while following the rigid federated/interoperable model of telecoms (or "defecting" to #TelcoOTT) is the equivalent of cooperation vs. self-interest.

However, there are differences here which make the situation even more painful for the telecoms industry.

On the disruptive innovation front, the telcos' response has been made even more lethargic by the distraction of slow-moving, expensive and inappropriate solutions like IMS. And rather than just having scrappy startups driving the disruption, we have the force of behemoths like Google, Facebook, Apple and Skype. Add in the fact that ordinary telephony and SMS seems to be "going out of fashion" and that LTE represents a "market transition" forcing a change from the incumbents at precisely the wrong time, and you see the problem. I don't disagree with Keith's view that telco bundling is important - but it implicitly requires having valuable things to bundle.

And the prisoner's dilemma is skewed by the addition of time as a critical factor. First-mover advantage for the "traitors" might be sustainable, albeit at the likely cost of the unfortunates who stay quiet - or who procrastinate for too long. This is why the argument I've heard in the last few days, that Telefonica's TU Me launch might spawn another 50 Telco-OTT Me-TU's is fallacious. Most of those will be TU Late. (ahem, sorry...)

The collaboration option is also subject to regulatory intervention, as well as even more delay - witness the push-back of VoLTE launch by Verizon to late 2013, and the ongoing farce of RCSe's supposed arrival. It's certainly not "just there" and as I wrote last week, it's doubtful that it will ever "just work" in a way that users actually want.

Extensions of these dilemmas apply in other telecom areas too - content and TV, commerce and payments, identity, cloud services and so forth. The details differ somewhat, but the story is the same.

Keith suggested that the #TelcoOTT approach was likely to lead to "value destruction" and "Dante's Inferno". I see his point, although I'd choose another example from more recent popular culture. If you're going to risk everything, then Fight Club's Tyler Durden isn't a bad role model "I say never be complete, I say stop being perfect, I say let... lets evolve, let the chips fall where they may." (And yes, I do remember the movie's ending. And there are plenty of other quotes I like, that are unprintable on this blog, but help yourself).

I'm not anti-telco. But I am realistic that solving those two dilemmas, simultaneously, needs some pretty radical moves. The industry en masse hasn't taken those moves. It's largely paralysed, shackled to the walls of its cell, by the manacles of legacy and interoperability. And now individual members can hear the executioner approaching, and some of them want freedom, rather than going to the gallows together.

Yes, Telefonica's TU Me - or its OTT mobile wallet solution or WiFi "onload" service - might not succeed. But they're all better than sitting and moaning about one's dilemmas in a support group, while the world collapses around you.

If you haven't yet bought the Telco-OTT report - details are here . Or inquire about a private workshop / advisory engagement.

Phone number as OTT identifier - a problem in the making?

I got an SMS this morning from a business contact - actually a client from an operator who came to the Telco-OTT workshop a couple of weeks ago. It was an invitation to download TU Me, the new Telefonica VoIP and messaging app, sent from within the app itself.

But as it happens, I've already got the app on my phone. But what I don't have on my phone is this person's phone number. So I can't connect to them. And so TU Me didn't realise we already knew each other.

This got me thinking. A lot of the more successful recent OTT apps (whether Telco-OTT or Internet-OTT) have used the contact list and people's phone numbers as easy ways to make connections. Viber and WhatsApp both do this. There's been a bit of a privacy outcry about such apps uploading your contacts to the cloud, but newer ones like TU Me seem to have smoothed peoples' fears and claim that they only use the data to find other contacts.

In many ways, this is a good thing. It helps automate the process of "virality", by seeing which other app users have your phone number, and vice-versa, in their phone books. Using the number gets around random spellings and nicknames - if you have 07111 222333 down as "Johnny Boy" it doesn't matter, as long as Jonathon / John / Jack / Jon has your number in his phonebook too. It also avoids the complexity of issuing and managing a separate ID and login (eg I'm @disruptivedean on Twitter, although I use my real name on LinkedIn and Quora).

But phonebook-driven virality only gets you so far. Traditionally, I would have had all my contacts replicated in my handset, including the client I mentioned at the start. But I don't. I only have people that I actually want to phone or SMS on a regular basis. I don't "add contact" in my Outlook and sync everyone to my phone. I don't use vCard. I only have about 50% of my Facebook friends, maybe 10% of my LinkedIn contacts and 1% of my Twitter followers' phone numbers on my phone.

I don't want 1000+ people in my handset phonebook. In my head, the phonebook is for certain use-cases - eg chats with friends and family, arranging meetings with regular clients and business contacts (often via SMS), some businesses I need to call frequently (accountants, bank etc) and a bunch of "legacy" numbers I ought to delete. I don't want to scroll past dozens of acquaintances that I'll never actually contact "by phone". I also want to reduce the risk of embarrassing mistakes, like accidentally mis-keying and sending personal texts to work contacts.

I've got plenty of good business and personal contacts I have no intention of saving in my phonebook, because I know I'll likely never phone them. In particular, I don't bother with most international numbers as usually I'll only call at specific times - and then I'll use Skype from my PC (or occasionally my handset). Or if I do suddenly need to call for some reason, I'll probably use Outlook to find an old email from them, and just dial the number in the footer. And then not save the number afterwards.

Now some people are probably different. They'll use various forms of syncing, and have a single contact list. Good for them, but not for me. I guess my client has my number in my phone for this reason - or perhaps he put it in his contact-list pre-emptively in case he got lost or delayed on the way to the Telco-OTT workshop. I prefer maintaining multiple independent lists - especially keeping work & personal contacts about 80% separate. I also use different names / pseudonyms, and avoid things like Android because I don't want everything converged.

Which brings me back to OTT apps like TUMe and WhatsApp and Viber. There may well be instances where I do want to connect with people like my client on these tools. They might evolve to have certain use-cases that go beyond my normal use of telephony and SMS, for example being good for occasional contacts, IM chats or image-sharing.

But if I'm forced to use a phone number as an identifier - and enter it in my main "master" phonebook" - then I simply won't do that.

I think that using the number is a neat way to get early "virality" - Viber proves this. But it runs into a ceiling after a while. Not only that, but many PC/tablet-based users don't want to associate a phone number with a given messaging or social account. No matter how many times Facebook and Google try to take my mobile number "for backup purposes", I tell them to get lost.

This is true for things like RCSe as well - I remember a Middle Eastern operator ask a question at a conference a few months ago, wondering if it was possible to have a separate ID (eg an email address or a BBM-style PIN) for the account, as users in his region are wary of sharing phone numbers but may still want to IM. There's a ton of social, cultural and psychological factors at play here around phone numbers.

I think there's a reason that the most successful OTT services such as Facebook, Skype, BBM, Twitter and others have managed to scale so well - unique IDs. They have also been able to use third-party directories - phone contact lists, Gmail and Yahoo and AOL accounts etc - to help find contacts, and selectively invite people to become friends/contacts on the new system.

As our use of telephony and SMS diminishes, one of the side-effects will be a parallel fall in the value and usefulness of the phone number. Add in multiple numbers, churn, portability, "temporary numbers" and other factors and it gets worse still. OTT players (Internet or Telco) who use the directory & E164 identifiers will get a short-term quick win, but face an uncertain future if they depend on a source of identity that is sliding gradually into irrelevance.

Wednesday, May 09, 2012

Telefonica TU Me - first salvo in full-scale interoperator Telco-OTT warfare

Regular readers of this blog will know that I am a big believer in operators developing their own OTT-style services. I published the first full analyst report on the Telco-OTT concept it a few months back, and conducted the first public workshop (summary deck here) about two weeks ago.

Telco-OTT offerings are not new - I've found over 100 examples, split between four broad categories of Communications, Content, Connectivity and Cloud. Some have been around for a decade or more, and I am adding more on a weekly basis. I've also been engaged in numerous private consulting projects and workshops, some for major international operators looking for a disruptive play.

One thing that has been absent so far has been any large-scale "operator-on-operator" battles for VoIP and messaging. No operator has really gone out to create a complete Skype / Viber / WhatsApp / Facebook from scratch, especially rolled out globally to the entire 2-billion strong Internet user base. There have been some regional plays for Telco-OTT VoIP in Asia, and innovative fixed-onto-mobile or niche/OTT-extension plays such as Rogers One Number and "roaming VoIP" plays from operators like Mobily and Cellcom. T-Mobile US's Bobsled is a customised version of Vivox's VoIP platform, but hasn't really got the same sort of scope and scale.

This has all changed with today's formal launch of Telefonica Digital's TU Me application, which is a sort-of combined Viber+WhatsApp with a unique "timeline" format for communications, which is stored in the cloud. It works over WiFi and 3G/4G data, but is currently only available on iPhone.

Various things make it unique. First off, it's an Internet-centric app with plain-English terms of service, no support for emergency calling, no (at the moment) TUMeOut or TUMeIn interoperability with the PSTN, and no interworking with SMS. It's not intended for "primary telephony replacement". It's also - uniquely for a telco proposition - unashamedly a beta "work in progress" app. It crashes, it's only available in English, the ToS basically says "If it doesn't work, sorry". Caveat emptor. (Caveat utilor? It's free at present).

Yes, there are various other VoIP/IM apps out in the wild that do broadly similar things. But apart from Skype and Google Voice, they're not run by companies with 300m+ existing users to whom they can evangelise and bundle. Telefonica also ought to have some cost advantages, as it's got its own cloud platforms and back-office capabilities.

Also, and what is surely causing some bulging eyes today, it's come out in advance of Telefonica's RCSe / Joyn launch. It wouldn't surprise me if there's a (politically-calculated) plan to interwork with RCSe at some point, but that's just paying lip-service to the old and out-moded federated approach to telecoms.

The other interesting thing is the apparent business model. It looks to me as if Telefonica has adopted cloud-based models for a communications-based service. It looks as though it may charge for hosting the "timeline" beyond a free first year, and I bet it does a bunch of other cloud-based clever functions around the voice and messaging content - perhaps recording, analytics, translation, seach and so on. This fits with my view (and the trend accelerated by WebRTC) that the actual business of shipping bits of speech or text around is moving down to become a mere function, not a service. Monetisable services will be what happens around voice or messaging.

I'm expecting to see various other operators enter the Telco-OTT space, either with other "big" plays like this - hopefully differentiated - or with niche offerings targetting travellers, voicemail, particular groups etc.

But for now, I've got to applaud Telefonica for putting TU Me out there - it validates a lot of what I've been saying about Telco-OTT, and makes me feel less like a lone rebel shouting into the wind.

Saturday, May 05, 2012

Summary slides on Telco-OTT rationale

Last week, Martin Geddes & I ran our first public workshop on Telco-OTT services, and why both fixed and mobile operators should be developing their own Internet-based services. This was a full-day event, with a varied attendance from operators, vendors, Internet companies, regulators and others. Rather than just being presentations from myself and Martin, we ran the event to get a good amount of discussion, interaction and networking among the participants.

We covered general trends in the telecoms industry that make it inevitable that the historic "federation" model of telecoms services is going to break down - and sources of value that remain open to operators as that happens. We examined some of the underlying and unspoken assumptions that the telecoms industry often makes. Importantly, we also looked at some of the practicalities and organisational challenges involved in telcos developing innovative products and services, some of which may cannibalise existing busineses.

Our view is that "managed and minimal self-cannibalisation" is far better than simply burying heads in sand and waiting for the Internet juggernaut to do it instead, in a much more catastrophic fashion. It's also much better than trying to compete with Internet-OTT services with poorly thought-out legacy solutions like RCSe.

Our view is that the industry spends too much time thinking about "Telcos vs. OTT" and too little time considering "Telcos exploiting OTT".

The event drilled into the four main areas of Telco-OTT services: Communications, Cloud, Content & Connectivity. These are all covered in much greater detail in my recent report on Telco-OTT Strategies and Case Studies.

If you want to get a quick backgrounder on the "story", we've uploaded a summary slide-deck. You can view it here.

Have a look through it, feel free to comment here on this blog, and if you'd like to take it further, please get in touch (information AT disruptive-analysis DOT com) or buy the full report.

We'll soon be announcing future public workshops, as well as conducting private internal sessions for specific clients (under NDA where appropriate). I've also been doing various in-depth consulting engagements in this area with vendors and operators, and would be happy to discuss your specific requirements.

Wednesday, May 02, 2012

Upcoming Events: Open Mobile Summit, NGMN, Small Cells & more

Future of Voice & Telco-OTT

Firstly, a big round of thanks to everyone who came to last week's London Future of Voice and inaugural Telco-OTT workshops. Martin & I were very pleased with the levels of insight & interaction, and the general atmosphere of learning and collaboration among supposed rivals. I've come out of the events with a range of extra thoughts and ideas, and will be feeding those back into our ever-evolving story.

On that topic, we're still finalising dates for our next public FoV / OTT workshops in the US (and after that, back in UK/Europe and maybe Asia later in the year), as well as talking to various companies about running internal private or custom workshops for staff/partners/customers. We're also thinking about shorter varieties for breakfast roundtables, press lunches etc.

If you're interested in hosting or sponsoring an event on Future of Voice, Telco-OTT or related areas, please drop me a line via information AT disruptive-analysis DOT com . More detail is also available on the main Future of Comms website.

In addition to my own smaller workshop-style events, I'm also going to be speaking at or chairing various other major conferences over the next couple of months.


Open Mobile Summit

In particular, I'll be at the Open Mobile Summit in London (link here) on May 29-30 . I’ll be moderating a panel on the possible operator responses to so-called OTT providers, including whether operators should launch their own OTT services (ie my Telco-OTT hypothesis). Dr. Rainer Deutschmann, SVP Core Telco, Deutsche Telekom and Daniel Gurrola, VP, Orange, are just 2 of the heavyweight operators participating in this session’s line-up. It wouldn't surprise me if my favourite topic of RCS crops up as well, so anticipate some fireworks and the odd awkward question....

I'm quite a fan of the OMS events, having spoken at four previous conferences. There's usually a good mix of senior people from across the value chain - generally focused more on services (next gen voice, cloud, advertising, payments and commerce etc), rather than infrastructure. Unlike some events I've been to, I also don't get the sense that vendor sponsors set the agenda unduly or get a free-ride.

Use discount code DISRUPTIVE or click here for special delegate rates.


NGMN Conference

I'm not going to be going to the LTE World Summit this year. In general, I'm moving away from attending the larger events and trade shows, unless they are both profitable for me and enjoyable. I'm not at CTIA next week either, and I probably won't be at MWC in Barcelona next year, since as it's moving from the Fira to some new faceless barn way out by the airport.

Instead, I'm going to be at the NGMN Industry Conference in San Francisco from June 13-15. (Link here) which looks to be stuffed with CTOs and senior strategists. Hopefully that means there should be a focus on what's actually realistic with 4G technology, rather than marketing fluff and hype. I'm moderating a panel session on devices including NTT DoCoMo, Bell Mobility, Samsung and Qualcomm representatives. I'll actually be wearing my "second hat" as an associate of STL Partners / Telco 2.0 , and primarily representing their work & world-view, where it is congruent with my own.

(That means that I won't be at the STL/Telco 2.0 London event that's running at the same time, which I'd also heartily recommend for a less-tech heavy view on telco & media business models and service opportunities)


Small Cell World Summit

My other main gig before the summer is back in London, at the end of June, at the Small Cell Summit (formerly the Femto Summit). Link is here. I'll be moderating a panel session discussing the practicalities of rolling out small cells on a large scale, and also probably chairing one of the other sessions. Should be interesting to see what's going on in the world of small cells & femtos - in my mind a really important part of increasing network capacity, rather than trying to over-engineer the core and policy parts of the infrastructure.

(Special plug here for the organisers, who've clearly got their priorities right, as they've arranged it at a venue which is walking distance from my house.)


Other events & speaker requests

Later in the year, I'll be doing an executive training course on key disruptive trends in telecoms in Singapore (Sep 20th) - more details in a later post. I'll also probably be at one or more of the Telco 2.0 events in the Middle East or Asia-Pacific in Oct/Nov.

If you're interested in getting me along as a speaker, moderator or chair for another event, please drop me an email at information AT disruptive-analysis DOT com

My main topics are:

- Future of Voice (and messaging) services
- Telcos + OTT / Telcos vs. OTT / Telco-OTT strategies
- Mobile Data Policy/Traffic Management & Optimisation
- Wi-Fi (offload, devices, carriers, user experience etc)
- Operator Business Models
- Mobile Broadband Networks (3G / 4G)
- Mobile devices & ecosystems