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Thursday, June 26, 2014

Quick thoughts from WebRTC Expo last week

I've already written about the telco aspects of the big WebRTC conference & exhibition last week.

This is just a quick summary of some of the other things that have stuck in my mind. It doesn't cover all the companies or trends I saw - a more holistic analysis will be included in forthcoming updates of my paid WebRTC research. Also, there were sections of the event (in multiple streams) that I couldn't attend personally - hopefully there will be other articles on healthcare apps, for example.

Top of mind themes emerging are:

  • Customer service & call centre use-cases are everywhere, and definitely the most "commercial" part of WebRTC at present. The show featured a lot more integrated solutions, plugging WebRTC into existing platforms & industry structure - and adding in the power of the web in mashups for both agents & end-users. Various vendors had ways to analyse WebRTC speech, annote the agent's information via a browser etc. It all has an aura of "realness" around it, especially for finance and retail sectors.
  • There's a whole range of other actually-deployed services, especially around distance-learning/training, video chat and conferencing. That said, a lot of UC and collaboration use-cases are more "now WebRTC-enabled!" rather than "designed from the ground-up for WebRTC".
  • There's still a bit of a gap for innovative "pure WebRTC" use-cases that don't lean on traditional forms of communications, or just move beyond legacy telephony APIs. There's some fun music-jamming things, or a handful of games, but I haven't seen a (desktop) WebRTC-based equivalent of Chatroulette or anything clearly "viral". I'm also a bit perturbed that the adult industry seemingly hasn't bothered to turn up to the WebRTC party - usually it's first in line for any new web technology, and its absence is a bit of a puzzler.
  • Where WebRTC innovation does turn up, it may well be in specific industry verticals. We know about finance and healthcare and real-estate demos and deployments - but I'm starting to wonder about government, media, utilities and so on. That said, an interesting chat at a separate event yesterday opened my eyes some possibilities around public safety.
  • Many of the other use-cases are going to be heavily mobile-centric. This implies a need for 3rd party APIs/SDKs/platforms, as few consumer mobile apps use the browser, even on Android devices where WebRTC can be properly supported. On iOS, a 3rd-party approach is almost mandatory to embed voice/video into native apps. Purists complain that it "isn't proper WebRTC", but that's an irrelevant technical religious debate and doesn't detract from the opportunity. One company (Imagination) was even suggesting to rip out the Google/GIPS media engine from WebRTC and use theirs instead, as it's apparently mobile-optimised and can deal with the acoustic and silicon idiosyncrasies of smartphones better.
  • Actually, the WebRTC purists (especially the "web" bit) were wincing a lot last week. Plug-ins are back with a vengeance, with at least 3 companies offering products. Temasys and Priologic had a bit of a barney about closed-but-free vs. open-source. I'm not a security specialist, but I can appreciate why tighter controls over what accesses the camera/mic are desirable. In my view, the purists have a lot more wincing ahead, as even if Apple & Microsoft adopt WebRTC (see below), both have millions of legacy version users who don't update.
  • In a nutshell, RTCWeb (the IETF standard for nuts-and-bolts protocols) is looking ever-more important than WebRTC (the W3C API exposing all that stuff to web developers). Frankly, making the technology of nasty, complex bits of realtime communications infrastructure all work nicely, is rather more important than the precise way it's presented to developers. The "ends" of democratising voice, video & data into apps and websites and devices easily justify occasionally fudging the "means".
  • For companies or developers that don't have longstanding communications expertise, the route to adoption of WebRTC is likely to be via one a platform / WebRTCaaS provider of some sort. There's a lot to choose from - some voice-centric, some video-oriented, some integrated with existing call centres or messaging, some more interested in QoS / scalability, some more around pre-built apps, some more mobile-oriented and so forth. Each developer will have to navigate a long list to see which are the best fits with their specific needs.
  • Part of the problem is that some people read "MS & Apple don't support it" headlines and don't look beyond that. Most people I speak to don't realise what it is that all the WebRTCaaS API/SDK providers like Tokbox & Temasys & Requestec etc are actually doing. I think there needs to be a neater "category" and some serious evangelism - at the moment, I get the impression that the standards guys are a bit irked by their relevance and growing importance, just as they are with the SBC/gateway proliferation rather than P2P use-cases.
  • The big discussion about silos vs. integration with legacy systems, via gateways, is largely confined to voice-primary uses, given that's what legacy telephony, UC and contact centres do almost exclusively. Video communications today is basically enterprise conferencing, plus Skype/FaceTime/Hangouts/consumer mobile apps. That's not to say that video-gatewaying won't be more important in future - and will likely need a lot of heavy-lifting infrastructure - but today, interop is about plain-old phone calls.
  • Microsoft gave a presentation which (in a nutshell) said that (a) it's deeply engaged in this area, but (b) don't expect IE to support WebRTC 1.0 any time soon, except GetUserMedia APIs. There's a long list of other HTML5 bits & pieces waiting to be implemented by the IE team, so WebRTC has to battle for engineering resources against all of those, as well as undoubted pressure from Skype & Lync teams. However it appears ever-more enthusiastic about ORTC, which is showing so many signs of forming the basis of WebRTC 2.0, that various of the 1.0 advocates are getting a little irked at its jumping the gun.
  • Various people were pessimistic/optimistic about Apple. "They won't bother", "But they joined the working group", "They'll wait for the standard" etc. In essence - nobody knows, everyone's got a theory. And we'll probably all be wrong. Happy to give you my own guesses if you want....
  • Datachannel was around more as a "supporting actor" than as a headline act. Various use-cases had messaging or co-browsing or screen-sharing incorporated, but there seemed to be relatively few "pure" datachannel use-cases. I didn't see much M2M or IOT stuff around. A bit disappointing
  • I think some people are getting impatient and expecting things overnight. It is only literally 3 years since WebRTC was even spoken about publicly - I remember it from the eComm in San Francisco in June 2011, the day before my & Martin Geddes' first Future of Voice workshop in Santa Clara. It's worth noting that with Snapchat/AddLive & the probable imminent arrival of WebRTC Hangouts, as well as various customer service functions, we're probably not far off 100m active users. Much as I hate  "Fastest growing web/comms thing EVER!!!!" articles, I could probably imagine writing one in a few months' time. Let's just put it this way - I expect there are already more active WebRTC users than RCS or VoLTE users, and it's certain to stay that way.
Overall, I'd say the Expo was more "grown up", with real use-cases, but perhaps a dearth of truly surprising "Web whiz-bangs". And I still haven't seen a WebRTC-enabled drone, despite the cavernous hangar-like venue used for the event being perfect for one.

Friday, June 20, 2014

The other side of the coin: a few telcos DO "get it"....

What a difference a week makes.

Last week I was in Munich at the NextGen Service Platforms event, listening to the last of the dinosaurs coming up with ever-more improbable reasons why the Internet asteroid was going to have to play nicely with terrestrial IMS networks. My rather bruising write-up is here.

This week I've been in Atlanta, at the WebRTC Expo. There's still a few dinosaurs prowling the conference hall, but they're mostly here on fact-finding missions about growing feathers or evolving into mammals.

In particular, I discovered a couple that have already made the leap from Mesozoic to Cenozoic eras. I was moderating a session featuring two of the telcos that have taken WebRTC (and also Telco-OTT models) to heart most closely: Telefonica and Telenor.

First off, a mea culpa. Last year, when Telefonica announced the end of its Digital unit as a separate unit, I assumed that this meant that the old-school telco "white blood cells" had rejected the Internet implants, pushing back against the innovative, risk-taking culture that spawned TuMe & TuGo. Turns out that I was wrong - it may well have been the other way around.

The new overall head of Communications Services for Telefonica is Ian Small, the former CEO of the acquired TokBox unit, the WebRTC platform provider based in SF, and which was inside the former Digital business. He's now in charge of delivering the future of voice, video and messaging for 300m-odd customers. And he recognises that traditional telephony and SMS is inevitably going to decline, so is out looking for interesting & plausible ways to replace the missing revenues. 

While he clearly has a lot of politics to deal with - not all parts of large businesses grasp change at  the same pace - I suspect that it's going to take an awful lot to convince him of the benefits of lower-than-common-denominator RCS/joyn or that IMS is an optimal platform for innovation. (My RCS Zombie slide from Munich got another good reception)

Telefonica is developing quite a few proof-points for disruption around voice and video:

  • TokBox, which is increasingly looking like one of the real leaders in offering WebRTC as a service, especially around video-based customer service & mobile SDKs, as well as its deal with Mozilla (see below). Its customer references now include brands like esurance (for mobile-app claims adjustment) and Bridgestone (in-store golf kiosks)
  • Tuenti, which I wrote about a few months ago, which combines internal-MVNO, Telco-OTT mobile apps, WebRTC and zero-rated data all in one. It subsequently blogged about its WebRTC work here - looks like it didn't use Tokbox, but did its own implementation. The fact that each business unit at Telefonica is free to create its own products quickly, ignoring the so-called "core" infrastructure, is class-leading in terms of organisational dynamics.
  • The now-defunct TUMe standalone VoIP app, and the still-lively phone-extension TUGo which seems to have quite a lot of fans. I've seen some other interesting demos as well.
  • A new deal with Mozilla/Firefox, which is intending to embed video-calling directly into the browser. Not web-pages, but as part of the furniture of the browser itself. Given that Firefox has 450m users, and auto-updates regularly, this essentially gets TF/TokBox to "half a Skype" almost overnight. Add in making new versions of low-cost Firefox OS smartphones WebRTC-friendly, too
  • Assorted partnerships, including with Intel, Qualcomm (chips for the aforementioned low-end devices, I'm guessing with hardware VP8 acceleration) and Ericsson
  • References to "intention", "purpose" and the value of voice/video beyond the transport of minutes of speech.
Overall, I still rate Telefonica as probably the large telco that most "gets" the future of communications, even though I'm sure there remain differences of opinion across the company. (The O2 Germany presentation in Munich about the harsh realities of IMS/VoLTE deployment being an obvious case-in-point, and I wouldn't be surprised to find a dipolodocus or two still wandering around Madrid).

Then there's Telenor. Unlike Telefonica, it still has its separate "Digital"-branded arm, which has done things such as its previous Telco-OTT content business Comoyo, and various other current projects. Like Telefonica, the difference here is organisational - Telenor Digital has the freedom to actually launch things, without getting explicit permission from the "mothership". This is very different to other service providers, where labs or "innovation centres" are often just graveyards of good ideas that have been sat-upon by vested interested elsewhere.

I'd previously spoken to Telenor about appear.in, its simple web-based video chat service. Although similar to a number of other WebRTC "video room" services, it seems to have gained more attention than some, especially as it's designed to have minimal "sign-up friction". It also now has one of the few massmarket-ready WebRTC mobile consumer apps, and is allowing users to claim specific rooms (I've got appear.in/disruptiveanalysis allocated to me, for example).

But what really grabbed the attention of the conference attendees was the history of how appear.in was created - one of the least telco-like stories I've come across. As a web-centric company, Telenor Digital came across WebRTC quite a while back and thought it was interesting. So, last summer, it assigned 3 interns a project to try and create something cool with it. (The word "cool" continually featured in the presentation and Q&A - itself pretty unique for a telco-run initiative). 6 weeks later, appear.in was born, and indeed, seemed cool to the people who'd asked the developers to work on it.

As for how it got from that early version to actually being deployed? A lengthy cycle of testing, integration, focus groups, regulatory inquiries, BSS/OSS development etc? 

No. Try this instead:

"Well, it was summer in Norway at that point. And all the grown-ups were on holiday. So we just launched it".

Apparently a senior Telenor exec was quizzed by a Norwegian newspaper about his cool new Skype competitor. He had to give a tactful "I'll get back to you" answer.

Since then, appear.in has continued to grow (although no hard numbers have been released yet). It's appeared on the BBC's Click technology show, and has launched a mobile app version. Oh, and the "infrastructure" needed to run it costs about $300/month.

A critical aspect of appear.in is that it's as much about design ("cool!") as it is about technology. In fact, the Atlanta speaker Dag-Inge Aas has written his own excellent blog post about it on appear.in's site, here. In his words "WebRTC allows developers to focus on creating good, innovative user experiences, instead of worrying about the technology". That is completely antithetical to the traditional telco mindset of worrying about standards, interoperability, interface specs  before eventually - if ever - actually talking about the end-user's needs and behaviour.

As yet, appear.in is not being monetised. It's quite possible that the other units of Telenor may take a more conservative approach to future voice and video service creation. But I'm willing to bet that it's units like Telenor Digital that will make a difference in the medium term, and the fact that it has the autonomy to create and launch disruptive new services is a good sign. Compare and constrast "the grown-ups were on holiday, so we launched it anyway" with "we asked the regulator about WebRTC before we built anything, and got 12 pages of questions in response". Which one sounds like the web? And which one sounds like the traditional way of doing things?

It's about time for telcos to start asking for forgiveness if they need to, instead of permission just-in-case. And it's about time regulators and governments encouraged them to do so, by ensuring that any sanctions (if needed) are rare and proportionate.

As I wrote last week, the key thing is not migrating legacy networks. It's migrating legacy thinking and philosophy. Design-led approach, freemium models, a nuanced attitude to QoS, a "let's just do it" philosophy, web-style timescales and costs (3 developers x 6 weeks, $300/month) and a focus on communications intent & purpose are all critical.

It's really good to see a couple of telecom operators - or at least, certain groups within them - clearly demonstrating a break with the past. Yes, I expect there will need to be some compromises between old and new - but the mere fact that the innovators are being empowered to get things moving, is invigorating. 

Last week's event pretty much made me want to write off the whole industry and let it face the telepocalyptic fires. But I can see a few phoenixes rising, even before the conflagration has finished turning the deadwood to ash.

Interested in WebRTC evolution? Check out Disruptive Analysis' ongoing research. And thanks muchly to the WebRTC Expo team, for recognising me as one of their "WebRTC Pioneers".

One last side-note: another part-telco/part-Internet company, Truphone, was also at the show. As well as touting its multi-local SIMs (something I've mentioned before), it also did a cool WebRTC demo that I've been wanting to see for ages - forcing unfamiliar inbound callers to go via a web interface, and demonstrate they actually knew the called party, by showing themselves as a LinkedIn contact, or a Facebook friend. Think of it as "interruption management" - if I know you on a social network, I'll probably tolerate an unexpected call from you. Anyone else? Sorry, I'm not interested in being "reachable".

Monday, June 16, 2014

Welcome to the "Age of Obfuscation" - with Apple as a major catalyst

Something I've expected to happen for a long time is starting to come true. Driven largely by growing global interest in privacy and security, we should expect an ever-greater number of technologies to try to hide or disguise ("obfuscate" - "render obscure, unclear, or unintelligible") both what they are, and what they're doing.

This goes beyond encryption of data, although that is an important part. Obfuscation does not just scramble the content of something, but either tries to hide its existence entirely, inserts random noise to make analytics unreliable, or pretends to be something else.

Obfuscation can be a deliberate action, or a side-effect of something else, such as a security technology, which then has collateral effects elsewhere. A lot of companies and services depend on monitoring and observing data - and are very "fragile" to their main data-source being switched-off or hidden.

Two things that Apple has done recently stand out:

  • iOS8 uses false WiFi IDs when looking for WiFi hotspots ("spoofing MAC addresses"). This means that your device's unique identity is not exposed when your phone/tablet does a scan for available hotspots. It reverts to the real MAC address only when you actually attempt to log onto one of them. This means that various businesses that use "broadcast" MACs will suffer from the obfuscation, for example tracking people walking through retail stores, or other less-salubrious forms of monitoring.
  • Also in iOS8 is something called App Extensions. This essentially allows one app to embed another mini-app. For example, a communications app might include a 3rd-party photo-editing capability, and the option to upload a snapshot from a video-call to another 3rd-party social network. This partly overcomes a longstanding Apple limitation on allowing apps to talk to each other - normally they run in closed silos. Android has something roughly similar too. This then also has some interesting obfuscation effects on the network - it makes defining data traffic "belonging to an app" even harder than it is already. Operator's DPI systems might be able to spot the 3rd-party app-in-app doing something with data, but it will become very hard to correctly allocate it, from the user's perspective. If you sell "$5/month Facebook access", then you have to expect Facebook to use all manner of mashups and integrations either on server or the device. 
 (The latter example is something I discuss in the context of "app-based charging" practical limitations, in my new report on mobile broadband business models).

Other examples of obfuscation are also appearing.

Google seems to be succeeding in getting its SPDY web-acceleration framework adopted as the basis of the forthcoming HTTP2, and in any case it is being used not just in Chrome but also IE and Safari as well. Although its main purpose is to improve web-page loading times, it will have some interesting side-effects. Often, web pages create multiple connections to multiple servers, slowing down as each one's URL gets decoded by DNS servers, as well as scrutinised by other boxes in the network. SPDY combines (multiplexes) the various HTTP requests into ore efficient form. In doing so, it also effectively encrypts them and thus hides them from - you guessed it - DPIs, proxies, caches and the like.

In other words, web traffic accelerated with SPDY will "go dark" to ISPs and telcos in the network path, making it much harder to do fine-grained policy management, or perhaps differential charging. As a result, US-based telecoms industry group ATIS has belatedly woken up and started the "Open Web Alliance" and is vainly hoping for telcos to be allowed to implement "SPDY proxies" to re-intermediate themselves. Given everything that's going on with Net Neutrality at the moment, I'd rate their chances of success as very low.

In general, all forms of encryption are on the rise - partly driven by revelations about national security agencies, but also because processor speeds are getting fast enough to routinely encrypt everything anyway. It's hard to argue against it.

But beyond that, I think we're about to see a pushback against data being collected for marketing and advertising purposes. Consumers - and their "advocates" who create devices or other products - are looking at ways to help improve privacy. It seems that often, legislation doesn't work well - or certainly not fast. So I suspect we'll see moves to hide or disguise meta-data, or "pollute" it to near-uselessness.

Maybe we'll have software that automatically clicks random locations on the web, makes unexpected searches, spoofs locations, or does false "likes". Maybe we'll see more app-in-app usage, or "steganography", hiding data encrypted inside other data. We will get more mixing of data flows - as seen in WebRTC, where voice and video streams can be bundled together. And we will see various methods of anonymisation - again, Apple is a major player leading the way with its use of DuckDuckGo as a search engine.

Looking ahead, I also expect to see a lot of data being sent/received through multiple independent paths - perhaps half of your content (or signalling) via WiFi and the rest through cellular - maybe even to different servers or services. Imagine storing half of a document's words on DropBox, and half on Google Drive, blending them only when necessary, on the device.

Various outcomes are likely:

  • Marketing and advertising, dependent on tracking various data sources, are going to become less reliable, as they will be working with dirty/hidden/partial/fake/unreliable data. Google and Facebook are also exposed here.
  • Governments are going to find interception and interpretation of communications much harder again. 
  • Telcos are going to lose a lot of visibility of user data traffic. A growing amount is already encrypted, but further layers of obfuscation are going to increase the problems faced by DPI boxes. False-positives and false-negatives will likely increase, and the practicalities of application/traffic detection or policy-enforcement will get much worse. App-based charging will introduce plenty of arbitrage opportunities. On the other hand it is also possible that some telcos could offer "obfuscation as a service" to improve privacy to customers - perhaps modifying web cookies, for example, or creating "noise" for search etc.
  • Developers will be able to create apps that are more private and secure - and perhaps cheaper for end-users in terms of data charges. There will be lots of interesting middleware providers or opportunities for "obfuscation enablers"
Welcome to the Age of Obfuscation, where everything online is not necessarily what it seems. And where data might well be Big, but it may also be polluted.

Friday, June 13, 2014

The old-world telco mindset lives on. IMS advocates still don't "get it"

I spent last week at the IIR NextGen Service Platforms conference in Munich, featuring a combination of material on Telecom APIs, WebRTC and "Legacy Network Evolution". Much of the emphasis was on service innovation for telcos. As well as myself, both Alan Quayle & Martin Geddes were attending and presenting.

By the end of the day, all three of us were muttering under our breaths - and being considerably more vocal on Twitter.

The main problem that irked us:

It isn't just legacy networks that need to evolve in telcos, it's legacy thinking.

In short, much of the day was taken up by presentations and discussions that combined myopia and lame excuses.

"We can't do anything with WebRTC unless we ask the regulators first"
"Our brand would suffer if we launched a service that didn't work perfectly"
"IMS means the end of silos [for communications]"
"French consumers are tired of downloading apps. They'll use embedded RCS"
"IMS will allow the creation of an ecosystem of OTT players"
"Consumers demand QoS"
"People would use more data if it was free - or if someone else paid for it"
"It brings universal reachability"
"3G was about Skype & Whatsapp. 4G will go beyond those silos, to Joyn"
"Everything can be linked to the phone number"
"We can do all the API & developer relationship stuff ourselves in-house"
"IMS is central to WebRTC"
"VoLTE will increase production costs for telephony, but we're making a bet on IMS as a platfom for other stuff"
"WebRTC is just another access"

There remains a worrying disconnect between market realities and the wishful-thinking, blinkered views still endemic in the telecoms world, especially, it seems, among those with a "telecoms academic" background.

  • A lack of focus on real customer requirements & behaviour. There remains no understanding of why people like fragmented applications or why they are often ambivalent to QoS.
  • A failure to recognise that "the web has won" and that using the web/cloud/apps domain - and business/development models - is the only way forward for telcos.
  • A rigid belief in the primacy of network QoS, despite (a) not understanding the limits of network maths/performance/wireless/coordination, (b) not understanding that QoS value is very use-case dependent, (c) not understanding that QoE is driven by many other variables than the network
  • Specifically, a rather charming-but-scary belief that users will choose a less-attractive app that always works well, rather than a better/cooler/cheaper app that only works well most of the time
  • A belief that usage of services will gain wide adoption merely because of interoperability (usually with a reference to SMS ancient history)
  • A complete refusal to engage with areas like behavioural psychology, social dynamics, user interaction models, purpose/Intenet and, above all, design
  • An inability to understand concepts such as "intention" and purpose - ie that increasingly the value of communications is why you communicate & what you're hoping to achieve, not the actual transport of bits that ensues
  • Ignoring the use of non-carrier networks in the enterprise, 3rd-party unmanaged WiFi, home etc, even though statistically they are becoming much more common, especially for video-type communications.
  • Overlooking the realities of the device marketplace - eg convincing Apple to implement anything it disdains, or equally trying to convince manufacturers of unlocked "vanilla" Android devices to implement software, which adds cost/time, yet appears unappreciated by users at point-of-purchase.
  • Taking a very traditional telco view of things like "reachability", without considering that people don't always want to be "reached".
  • Continued repetition of stupid cliches like "OTT" and "dumb pipe". These are usually a good indicator of cluelessness, unless prefaced with "so-called" and eyeball-rolling. I'm tempted to say that their utterance should be considered gross incompetence and merit instant dismissal.
Overall, it was pretty disheartening. Some of what I heard could be interpreted as comforting mantras chanted by old-school network engineers worried about their jobs. While that is understandable, it doesn't help the industry actually do what it needs to do - build platforms and services in the cloud, drop most of the QoS mythology, make sensible decisions about partnerships, and act fast.

Neither Alan nor Martin nor myself advocate that telcos turn into "pipes" - but equally, they have to identify the future sources of value in communications services if they are to remain relevant. This is about context, purpose, intention and "softer" things like that - delivered via APIs or rev-share deals, or on a freemium basis. "Interoperability" is not a consumer value in itself. It might help for some services, and it might hinder others. We all presented about things to do with voice or messaging that add value to the basic "telephony" proposition. But instead, we heard about VoLTE & RCS (!) as some sort of magical saviours that will help telcos "beat the OTTs" without any explanation of why that should be the case, and what real-world human use-cases will be impacted.

One speaker admitted that VoLTE (with SR-VCC) will increase the per-minute "production cost" of basic telephony. It's a brave CFO that takes the bet he offered - that IMS as a platform would generate revenues from new as-yet-unimagined services -  in spite of the almost-guaranteed decline in telephony value over the next few years.

As for WebRTC, quite a lot of speakers seemed to think its main role will be extending out VoLTE or RCS as a sort-of cheaper/easier softphone alternative. Fair enough, it might be useful for running a VoLTE extension on a WiFi tablet. (RCS - well, let's just say I had a new zombie slide, so you can guess my views. My intro presentation here & WebRTC workshop here). On the positive side, it seems that a lot of telcos are at least trialling or prototyping WebRTC, although most are probably too tied up with getting basic VoLTE deployed and working to worry about a WebRTC Phase 2 extension to it.

In my view, it normally takes the telecoms industry 4 years to spot a good idea, 4 years to implement it, and another 4 years to realise it was too late. For WebRTC, those numbers seem to have been cut to 2 years, which ranks as an improvement of sorts.

I'm off to Atlanta for the big WebRTC Expo & Conference next week, where I'll be moderating a number of the service provider panels. I suspect we'll get to rehash some of the same arguments about IMS again, although hopefully the fervent & innovative web/IT-centric atmosphere will permeate a few telco-academia brainwashed skulls and osmose into the legacy mindsets about service creation....

Thursday, June 05, 2014

Mobile data zero-rating: adhering to letter of the law on Net Neutrality, or the spirit?

An increasing number of mobile networks are zero-rating specific data services to their customers, giving free access to certain applications or websites, rather than charging against the customer's allotted quota of data.

Some of the best-known examples are in the developing world, with Facebook, Google, Wikipedia and other services offered for free on numerous networks, either as a temporary promotion or ongoing plan. Other examples in Europe (eg DT & TeliaSonera) have bundled free data traffic with paid music or video content. This is starting to cause controversy, as some observers perceive it to be contrary to the principles of Net Neutrality on the basis of differential treatment or pricing of Internet traffic.

This matter has gained a lot of attention recently, with the Chilean regulator (one of the earliest to enact "hard" Neutrality laws) banning the practice. Several articles & certain of my analyst peers have opined that zero-rating might give Facebook & Co. an unfair grip over novice Internet users, who might be left unaware of the rest of the Internet, or at least dissuaded from exploring it at extra cost. In more mature markets, there is a fear that zero-rating certain popular services might give operators an excuse to reduce "open Internet" quotas and steer users to partners who offer revenue-shares, or perhaps direct "sponsored data" payments for traffic.

I am more sanguine about these threats. Although these practices seem to break the letter of (some interpretations) of Net Neutrality, I'm less convinced they break it in spirit, when the actual outcomes are examined. That said, I'd certainly agree that zero-rating bears close and ongoing scrutiny in case future risks emerge, but I'd say that some clear benefits suggest "ex-ante" laws are not needed in this instance, as opposed to some other manifestations of "non-neutrality".

In addition, historic practices of the mobile industry - which nobody has complained about in the past - seem to suggest that this might all be a storm in a teacup.

In my mind, there are three main classes of mobile data zero-rating:

  • Zero-rating of paid Internet content/app, such as music or movie streaming
  • Zero-rating of free Internet content/apps, which might be either
    - Commercial (search or maps or social networking) or
    - Non-commercial (eg health & education & government services)
  • Zero-rating of non-Internet data, such as the telco's own in-house data services (MMS messaging for example, or new VoLTE phone services on 4G), or operational tasks such as handset software updates, customer-care functions and so on.
The first class - paid Internet apps - is largely irrelevant. For example, if a carrier sells Spotify as an add-on service, it can say "free data for Spotify use" (technically non-neutral), or equally easily, "buy Spotify & get 200MB a month extra data allowance as a bonus" (perfectly neutral). If the average usage is 200MB, it nets out, although some individual users might be worse/better off. Competitors are "disadvantaged" either way, because they didn't get a deal in place while Spotify did.

The third class ought to be non-controversial as well - mobile operators have long sold non-Internet data services in all manner of pricing configurations. MMS & SMS messages are priced per-message, irrespective of whether your photo compresses down to 1MB or 100kb. BlackBerry email services have traditionally been sold as per-month subscriptions, not volume-based. And your phone sends and receives a variety of zero-rated operational data just to function. If a service provider tried to charge for data used for an online help function, or to access its billing portal, it would get criticised by every consumer activist.

The complication emerging here is if one of these "own brand" services implicitly competes with Internet equivalents. Nowadays, MMS competes with all manner of photo-sharing apps, while a telco's own mobile TV implicitly competes with YouTube or Netflix or other commercial equivalents. Yet the original licences for 3G spectrum assumed that these were exactly the type of "multimedia" data services that operators would be selling. Open access to the public Internet only started taking off later, with the iPhone and USB modems, around 2006-7. Since then, the Internet tail has wagged the mobile data dog - but we shouldn't be surprised when "on-net" paid mobile data services appear again.

In any case, no such services have shown any sign of enough popularity to warrant telcos unilaterally reducing overall mobile data quotas, in the face of ever-fiercer competition. No MNO is going to do well selling "1GB open data + as much of our movie service as you want" vs. a rival selling 3GB of "anything" usage. There might be a Machiavellian wish for this to occur - and perhaps a few TV addicts who can live without flexibility - but given the tendency to just bundle useless and unwanted apps like RCS messaging in this category, we can probably relax about the hypothetical risks for now.

This leaves zero-rating of free Internet services as the main point of contention. And here, the real gripe seems to be with Facebook, Google, WeChat and similar large app providers, helping (mostly) developing-world operators with various types of free-access services. The perceived risk is that these companies become the "main destination" for low-end mobile Internet users, squeezing out startups or rivals. Alternatively, some wonder if they become "gateways", coordinating other apps inside their platforms and restricting access to others. Facebook's acquisitions of Onavo and Pryte suggest possible intentions.

What's in it for the telcos concerned? The pitch is that this gets non-data mobile users onto the first rung of Internet use with low friction, by offering something useful/popular for free. The hope is that they will then click "off-app" links, or start using other apps and websites that cost money to access. There are also rumours that some app providers are actually paying money ("sponsored data" rather than "zero rating") although others such as Wikipedia are very clear that they only deal on a zero-payment basis. There are also reports that some in-app payments (eg for games or stickers) are revenue-shared, even if the main app is free. Some of these deals are ongoing, while others are short-term promotions.

More hardcore neutrality advocates would prefer such operators to just give (say) a starter balance of 50MB free data for general use. And that is indeed a possible answer - although it is less clear that people would know what to use it for - or bother going through the pain of configuring their phones to explore.

Yet as before, there are some historical precedents here too. Many operators in developing countries have done special deals for Opera's Mini browser traffic, or sold SIM cards pre-configured for BlackBerry data. It is perhaps only because of Google and Facebook's scale, breadth and ambition that people seem to be objecting now. Both companies face cynicism over their public statements about "getting the whole world online" - is it pure philanthropy, or also self-interest?

Another wrinkle is also making zero-rating seem "acceptable". Some operators are giving free access to educational material, such as Econet in Zimbabwe. It isn't too hard to imagine a charity like the Gates Foundation offering free access to anti-malaria advice, either - or perhaps local authorities giving free access to jobs websites or agricultural market pricing services. Prohibiting zero-rating might discourage such initiatives.

On balance, the benefits seem to outweigh the risks, as long as appropriate scrutiny is applied. Many use-cases seem uncontroversial, while historical precedent makes it difficult to frame this as a new anti-competitive practice, too.

Overall, Disruptive Analysis expects zero-rating to become commonplace, especially in developing markets. It forecasts more than 1.5bn people to have access to zero-rated applications or content by 2019, one of the findings in its new report on "non-neutral" mobile data business models.

It is right that regulators and neutrality advocates should keep a close eye on zero-rating - but it should not be summarily prohibited without careful thought.

Tuesday, June 03, 2014

Only 6% of Mobile Broadband revenues from "non-neutral" access by 2019

Non-Neutral Mobile Broadband Business Models report

New Non-Neutral Mobile Broadband Business Models will generate $25bn in 2019 - just 6% of total mobile Internet/data access revenue. Is the current fierce debate on Net Neutrality just a “storm in a teacup” for the mobile industry? 

Disruptive Analysis has published a major study into the viability and potential scale of over 25 forms of "non-neutral" mobile broadband & Internet business models, such as "sponsored data", "zero-rated" apps and differential network QoS or "fast lanes". 

Many of these approaches are highly controversial, with regulators and law-makers coming under pressure from technology companies, telecoms operators, lobbyists, activists and even political parties. The US FCC, European Commission and other authorities are all considering  future Internet regulation, against a backdrop of hyperbole  and emotive language on all sides. 

Much of the discussion and media furore has centred on fixed/cable broadband ISPs, where the huge demand for streaming TV and movie content has tended to polarise discussion. 

Many observers have confused peering deals (eg Comcast/Netflix arrangement) with Net Neutrality & prioritisation, even though that is an entirely different & mostly irrelevant issue in this context.

But the mobile industry has very separate dynamics – 3G/4G data use is growing strongly with the adoption of smartphones and tablets, with data-plan revenues also climbing. Mobile apps and browsers are becoming ubiquitous gateways not just to content, but for communications, social media and business communications. The emerging “Internet of Things” is expected to be mobile-centric, again changing the landscape. 

Yet cellular operators fear congestion causing expensive capacity upgrades, as well as growth of so-called OTT (over the top) messaging and voice apps, undermining traditional non-data phone and SMS revenue streams. 

And as smartphone penetration trends towards saturation in developed markets, they want to differentiate data-plans on metrics other than raw speed and data-volumes. In the developing world, there is a desire to get lower-spending users onto the first rungs of mobile Internet usage – perhaps with free or more-limited offers – in the hope of future growth.

As a result, mobile operators are hoping that less-rigid "neutrality" rules will allow application-based charging for end-users, or perhaps new revenues from content companies paying for traffic on behalf of users (sponsored data) or for extra QoS. While some countries allow - or even mandate - blocking of certain apps, that is not generally an option in Europe, North America or most other advanced markets.
But a deeper set of questions is being overlooked:

  • What is actually feasible, technically or commercially?
  • What are the realistic "differential services" and policy use-cases that might get applied? 
  • Who might pay for which services or capabilities?  Will they pay more than they do already? How can they be persuaded, and by whom?
  • What is already happening in markets with more relaxed laws?
  • Can "two-sided business models" work in mobile broadband?
  • Will operators really be able to charge users "per-application"? Won't anyone who can afford the "whole Internet" be dissatisfied with only getting parts of it?
  • What are the risks to reputation, or from unintended consequences like arbitrage?
... and the elephant in the room - are any of the non-neutral models actually viable or valuable anyway? Is it actually worth the effort & cost of new equipment, software - and lawyers and lobbyists?
The answer? It may be worthwhile, but only just. Models like sponsored data, QoS-enhanced services and application-based charging might account for just 6% of overall mobile Internet/broadband revenues in 5 years' time. The much-ballyhooed two-sided business models might yield just 2% of overall mobile data revenues.

Some types of non-neutrality are less controversial than others. Some applications are really just about mobile broadband rather than access to the Public Internet. Mobile operators and regulators should focus first on the former - enterprise connections, leading-edge M2M & IoT uses of cellular, public safety data applications and maybe paid data for mobile advertising. 

Conversely, so-called "fast lanes" for mobile video or applications are complex to achieve, cause huge controversy and - in the final analysis - likely won't be worth much anyway.

Zero-rating of certain applications is interesting - some say it distorts competition and encourages mobile operators to reduce "general" open-Internet quotas, in favour of revenue-share deals with content players, or gives Facebook or Google too much of a lock over new Internet users. Yet it also does allow access to Wikipedia or educational material for free, and in many cases is just a promotional tool rather than a strategic shift. Disruptive Analysis feels it should be watched closely, but is not yet a major Neutrality risk (although the Chilean regulators recently thought differently, and banned it).
Lobbyists, politicians, telco execs and regulators need to "pick their battles" better.
One of the key themes is that new mobile data and Internet models are much harder to create than fixed non-neutral services. The realities of radio networks, device OS's, content/app consumption and policy/core infrastructure are hugely different and much more complex. Many ideas such as priority-QoS and application-based charging fail the test of "do they work well enough?"

Dean Bubley, Founder of Disruptive Analysis said "Many of the concepts for sponsored-data, mobile QoS and application-based charging sound good on paper for operators, but fail a reality-check. Irrespective of the arguments for and against Net Neutrality, it needs to be recognised that for mobile networks, there is little upside anyway - and indeed, many additional risks and costs" 

The report is available for purchase immediately. Details and payment options can be found here or from information AT disruptive-analysis DOT com

Sunday, June 01, 2014

June: Mobile broadband, WebRTC & a bit of cloud/NFV

This blog has been a little quiet over the past couple of weeks, but June is going to be a busy month. This is a quick post to tell you what's upcoming & to put it in context.

First up, June is "WebRTC Month" for some reason. There's at least 5 events I know about, and I'm expecting a flood of announcements as well

I'll be speaking and moderating at next week's big telco-centric IIR "service platforms" event in Munich on June 10-11 which has a specific WebRTC stream, as well as a parallel themes about telecom APIs and legacy networks evolution. Colleagues & partners Martin Geddes & Alan Quayle will be there too, if you need an overdose of telecoms vision and cynicism.

On the US scene, I'll also be at the huge WebRTC World Conference in Atlanta on June 17-19, where I'll be moderating various sessions (mostly on Service Providers & WebRTC) and also be one of the demo judges.

At both of those events I'll be presenting some of my current thinking on the WebRTC market, reflecting recent updates to my WebRTC research studies & reports. I'm also interested in meetings / briefings, so please contact me and I'll try to juggle my schedule. I'm especially interested in talking to telcos which are working on WebRTC projects or assessing the technology for future opportunities.

There's a few other things going on as well - another WebRTC conference in New York at the same time as the Munich one, plus a customer-service WebRTC event in Las Vegas, and last but not least Chris Koehnke & Tsahi Levent-Levi's developer-focused KrankyGeek gig in SF at the end of the month.
After all that imminent WebRTC frenzy, watch out for a big refresh of my research work coming up soon after - drop me a line if you'd like advance details or pre-order combined with my current study.

On the Mobile Broadband front, this is going to be a big week. I'm just proof-reading the brand new Disruptive Analysis strategy report on "Non-Neutral Mobile Broadband Business Models". I mentioned it in my last post, but decided to delay publication in order to add in more quantitative analysis and forecasts. UPDATE - REPORT PUBLISHED - CLICK HERE FOR DETAILS

Obviously, Net Neutrality is a huge topic at the moment, with the various debates on FCC proposals and EU Commission "telecoms package" ongoing. What nobody has drilled into is "what difference is this actually going to make?" in terms of possible addressable market and revenues by the carriers.

What the new report does is to look - quantitatively and qualitatively - at the most important new concepts such as Sponsored Data, Application-Based Charging, QoS-enhanced "Specialised Services" and Zero-Rating. It focuses specifically on Mobile broadband and Internet access, which often gets overlooked in all the confusing noise about Netflix, which is mostly fixed-centric.

A couple of teasers....
  • In 2019, new non-neutral mobile data business models will account for $25bn worldwide. Of that $18bn will be incremental to the traditional access market, the rest substitutive.
  • While that sounds a lot, it's still only about 6% of the total Mobile Broadband market. It is arguable whether that makes all the extra lawyers, lobbyists, equipment, software and negative PR worthwhile for many mobile operators
  • The most interesting & valuable use-case for sponsored data will be around paid traffic for advertising content, not so-called "toll-free" apps or general websites
  • Business and M2M use-cases for mobile broadband and QoS-based prioritsation will be very important. Additionally, these will largely be "uncontroversial" and so could (should?) be split off from the more contentious aspects of Net Neutrality
  • Zero-rating of mobile apps or content will continue growing in importance - with more than a billion users worldwide by 2019. There are some open questions about neutrality & competitive dynamics here, but developing-world users will be widely targeted with such offers in particular.
Watch out over the next few days for more details on the report and analysis. Email information AT disruptive-analysis DOT com if you're interested in buying the report or organising a workshop or other advisory input on this area.

The last area I'm giving a lot of thought to is NFV and "cloud communications", especially applied to voice and video - and tying into WebRTC and also IMS. Obviously, there's a whole host of WebRTCaaS platform providers that I'll be watching closely (including Tokbox's new deal with Mozilla). But there's also a lot going on in terms of offering bits of IMS infrastructure on a hosted and virtualised basis.

I was at Metaswitch's [disclosure: a client] customer conference last month hearing about its Clearwater open-source IMS cloud platform, I can see the benefits of having an environment to use either as an easier/cheaper testbed, or as a scalable system for certain new services such as fixed VoIP or hosted UC. The open-source side is fascinating too, as it potentially allows telcos to exploit business models that traditional vendors' equipment licences tend to inhibit, such as freemium services or "guest access", perhaps via WebRTC. Operators need to go beyond the legacy model of "subscribers" towards a much richer and flexible view of "users", as Internet companies have conclusively demonstrated.

One thing I am increasingly aware of is the number of different manifestations of "cloud comms" though. It can mean things like Clearwater, or it can mean virtualised resources such as media-servers or SBCs, or it can mean various voice/video platforms (Twilio, Tokbox, Temasys, Tropo et al), or it can mean fully-hosted/outsourced VoIP services such as Alianza's or it can mean.... You get my point. I'd quite like to define some more meaningful terms and segmentation for cloud communications, if I can.

(All that said, I'm still not swayed by NFV/cloud-hosted versions of the perenially-useless RCS, obviously - although for those telcos that insist, failing quickly and cheaply before switching to something better - selling cheese, perhaps - is a definite advantage)

So - June is about WebRTC, Mobile Broadband and Cloud/NFV. Only about 80% of the telecoms industry, so it shouldn't be too stressful! Feel free to leave me feedback here, via @disruptivedean, or on various threads and discussions on LinkedIn