Category Archives: Telecommunications

Bye Bye Meego Bye Bye Symbian

It was interesting watching Stephen Elop declare his loyalty to the Windows Phone 7 os and implicitly ditch Symbian and Meego. Question is did he do the right thing?

I’m in two minds about whether this was the right thing or not and none of my reasoning is because of my love for Android or Windows Phone 7. I have to confess I was a little surprised at Nokia’s choice. It’s not a surprise of the desire to ditch Symbian for a range of reasons which included the fact that it had been out innovated by other OS’s and was looking rather dated therefore loosing market share. Rumour also has it that the Symbian code base was forked so many times that it was out of control leading to poor quality and increased number of defects. So on that score did Elop just look at the internal Symbian development effort as requiring too much effort to bring it back in line? Did he think the legacy was an additional hindrance? Possibly. Before we completely write off Symbian as a child gone bad we have to remember that it’s still one of the largest device OS’s in use, even if iOS and Android have caught up. I’m less clear about the reasons for ditching Meego, but clearly it didn’t inspire any confidence in Elop.

Another reason for my surprise at Elop’s choice was because I’d have thought that the Android platform would’ve been potentially more attractive to Nokia at least from a technical stance. The leap from developing on Meego to Android would’ve been potentially less than jumping to Windows Phone 7. The learning curve for the Nokia development teams would surely have been less since they were pretty comfortable with linux based systems? The move to Windows Phone 7 I’m sure is going to be bigger effort to switch. The other thing I’d have thought would’ve been more attractive to Nokia would’ve been the fact they’d have had more flexibility with Android that with Windows Phone 7. Microsoft will seek to lock down many aspects of their platform whereas Android would’ve been more ‘open’ for them and Nokia would’ve had a bigger say in the Droid community than the Microsoft one.

Conversely though its no bad thing to have diversity in the handset OS market to create competition and on this front Nokia adopting Windows Phone 7,  as well as being a needed boost for Microsoft, is going to create more competition in the device OS market. Having a huge device supplier like Nokia adopting your platform is a real win and ultimately consumers may feel the benefits of competition in the future. However, what does Nokia jilting Intel over Meego mean for Meego?

Perhaps Elop felt that better the devil you know, or rather, better the devil he knows hence his choice of Windows. At MWC Elop stated that Symbian and Meego will be used for experimentation and disruption, but frankly this is wishful thinking. If you were a developer would you expend effort on an OS that’s going to die? It’s not cool to develop on a platform that has no future is it? Would you want to invest your time and future in Symbian and Meego knowing that Nokia is moving to Windows Phone 7? So if the developers don’t write code and there are no apps and no community then what experimentation and disruption is there going to be? Additionally why would Nokia employees want to waste time experimenting with Symbian and Meego when the future is Windows Phone 7? Surely you’re better of experimenting and disrupting with the Windows platform Nokia?

Let’s face it the one thing we can be sure of is that Symbian and Meego are going to die for Nokia devices. It might not happen next week, it might not happen next month but at some point the stark realisation that these platforms have no future will dawn on many people and they’ll stop developing. The question is not if, but when and how fast the demise of Symbian and Meego will happen.

Could the mobile data tsunami be reduced to a trickle?

I was reading the latest Cisco report (click here) on the growth of data and it was some pretty interesting reading. The growth on mobile saw a 2.5-3 times increase during 2010 compared to 2009. 24% of phones sold in 2010 were smartphones so 76% weren’t, meaning more growth is sure to come. Cisco are predicting it’s going to get a whole heap bigger by 2015 and specifically global mobile data traffic will increase 26-fold between 2010 and 2015. Mobile video traffic will exceed 50 percent for the first time in 2011. Yep I can believe the growth forecasts here without hesitation, but only in a scenario where something doesn’t constrain demand.

But something will constrain demand and that is the customers willingness to pay and quite possibly the operators ability to build such a large increase into their networks. One caveat I’ll add right up front is how do you define mobile traffic. For the purposes of this discussion I’m going to take an extreme view that mobile data is traffic going over mobile cellular networks i.e 2G+3G+4G. If traffic is going to grow 26 fold between 2010 to 2015 then that means we need to increase capacity by that amount in the mobile networks, BUT, I don’t see customers willing to pay 26 times more (or even 5 times more for example) for this increase in capacity – demand side won’t pay significantly more. Conversely I don’t see operators being able to drop prices so significantly that the 26-fold capacity increase can be absorbed without passing it onto the customer. Remember that operators’ margins for data are already considerably lower than voice and the demise of “unlimited” tariffs has shown just how unsustainable the business case for unlimited data really was. So operators will  increase prices and/or introduce caps to keep the margins at an acceptable level, which means customers have two choices, either pay for more capacity or reduce consumption on mobile networks (or a bit of both). The question that arises is are customers willing to pay more? Do customers value mobility enough to pay more or can they even afford to pay more for mobile data? I am not convinced getting a much greater share of the customer’s disposable income is possible. If I’m paying the phone bill would I surf for convenience on mobile or can I wait till I find a local wifi hotspot or wait till I can access my fixed data pipe at home or work? Many people will of course value the convenience of mobility and pay, for example remote workers or company employees who don’t pay the bills and therefore are insensitive to cost, but there’s a whole bunch of people who can’t or won’t pay. In that case then is there a big enough pool of people willing to pay to make it worthwhile for carriers to continuing investing in mobile network capacity?

So how can demand on mobile grow by 26-fold given these supply conditions? There are a couple of things that could help the situation:

1. A new earth shattering technology arrives that means you can deliver 26 times more data at the same price

2. A new mobile network topology and deployment is used to reduce cost

3. Operators use aggressive traffic shaping and policing to reduce peak throughput

4. Charging for delay sensitive data such as video is priced higher than non delay sensitive data such as email

5. Operators charge by time of day with the peak periods being more expensive than off peak periods, very much like the way electricity charging works

6. More offloading of mobile data to WiFi hotspots

Personally I don’t see some earth shattering technology round the corner to allow 26 more times data at the same price – no LTE is not going to cure famine and rid the world of Aids. At best LTE will give a 20%-30% improvement in efficiency, but the radio electronics aren’t the biggest cost component of operators networks, it’s the number masts that operators have to deploy, which won’t reduce with the advent of LTE. Network topologies and deployments could change to reduce cost, for example greater use of Femto technologies, but Femto mobility has its challenges and handing calls between cells as you move will be difficult. Aggressive shaping and policing could help to reduce peak throughputs by throttling lower priority traffic. Charging for delay sensitive data is something that’ll constrain demand because suddenly those free YouTube videos won’t look so free any more and the consequence is a reduction in the demand for video. Operators charging by time of day could be something that would flatten the peaks of usage and make people consume during less busy periods but then that sort reduces the value of mobile data if you can’t use it when you want to use it . Offloading mobile data to wifi means its not strictly mobile data any more right? It’s now public hotspot wifi data isn’t it? None of these in summary is going to close the gap between what a 26-fold increase in traffic will cost to deliver and what customers will be willing to pay.

As an aside, 2011 is going to be an interesting year for Wifi. Virgin have announced the launch of a wifi services, Sky have bought The Cloud and O2 are rolling out a wifi network too. The impact of these wifi hotspots on the mobile network will be interesting as the density and number of hotspots increases rapidly. Will wifi hotspots provide just enough mobility to deflect demand from the mobile networks? Will most of the future demand go over WiFi rather than mobile cellular technology? Will consumers adopt public WiFi hotspots technology? Clearly there are a number of parties who think so.

So how do we get to a 26-fold increase in mobile data traffic? I am sure that the overall increases in data (fibre+ADSL+cable+mobile+wireless etc) will occur, but how much and what proportion of it will go over mobile networks is not clear to me at all.  When I figure it out I’ll let you know.

Becoming a Telco 2.0

Unless you live on planet Mars there is no escaping the fact that the way people communicate has evolved significantly in the past 7 years. 15 to 25 year olds are spending a majority of their time communicating via social media sites rather than the “traditional” modes of communication such as voice, text and email. In fact some of the younger kids don’t even use voice. Even though data from operators shows that SMS is continuing to grow, its unclear what proportion of these texts are simply to send data to social networking sites rather than peer to peer communication.

These changes in communication habits have serious implications for operators because it could just turn them into bit pipes – carrying bits and bytes for communication applications. Lot’s of people argue that this inevitable. I’m inclined to agree that the risk of operators being relegated to bit pipes is high, but I’m also an optimist and think that operators can have a bigger and better role than just being the pipes. However, achieving this will require a significant effort on behalf of the operators to rise to this challenge.

Developers, developers and developers (and platforms too!)

So I’m guessing many of you will have heard the Steve Ballmer pitch to developers and gushing about how important they all are. Ok he may have been slightly over enthusiastic about the way he expressed it but he had a very good point. Microsoft knows it needs developers to innovate and create new products and services; operators need to come to the same realisation and fast.

There are two things that I think operators need to be mindful off when considering their execution strategies. The first is that historically operators haven’t been very successful in creating products and services beyond their core offerings. History is littered with the failures of operator initiatives to create new products and services, especially in the internet space. These failures have occurred for a host reasons but essentially developing products and services that customers want, particularly in a web centric world, require a completely different execution strategy and mindset to the one operators are used to.

The second key thing is that world is changing in terms of the way people buy and sell both goods and services, or put another way, the value chain is changing. This was really nice summed up  by Sam Ramji in his presentation entitled Darwin’s Finches on why APIs are important. Increasingly things are being patched together and sold in different ways and what you are selling may well be a component of someone else’s customer value proposition rather than being the customer value proposition. As an example of what I mean is customers may want to purchase an app that uses SMS capabilities to send the bits and bytes back and forth. The app provider may do a deal with an operator to provide the SMS bearer (i.e wholesale SMS) and its the app provider who delivers the customer value proposition, charges the customer and has the primary relationship with the customer. The SMS capability is in this case  just a component in delivering the overall customer value proposition. The permutations of this in a Web mash up world are endless so what operators need to do in this example is ensure that it’s their SMS capability that’s used and not some other operators. This means exposing your SMS capability through an API in a really simple and frictionless way. This is all about remaining relevant in an internet centric world. That’s why developers are so important. Developer are the people who use APIs from different providers to create customer value propositions and they’re the people who will increasingly be selling directly to customers. But attracting developers isn’t easy and requires significant effort. It requires a company to:

  • Adopt a new engagement model with developers. It requires nurturing a community that can have a two way dialogue with the operator.
  • Offer important and valuable capabilities via the APIs – it has to be compelling.
  • Adopt technologies and standards that are used by developers such as RESTful APIs and JSON – simpler more lightweight technologies. Sorry but SOAP isn’t going to cut it:-)
  • Have the right business model and revenue sharing agreements in place.

So let’s take this one stage further. Exposing capabilities is great, but if operators really want to be successful they need to embrace platforms from which they expose the capabilities via APIs. One of the best definitions I’ve seen on the web for a platform is:

A “platform” is a system that can be programmed and therefore customized by outside developers — users — and in that way, adapted to countless needs and niches that the platform’s original developers could not have possibly contemplated, much less had time to accommodate. This can be all done without the platform owner having to do anything at all.

(Apologies to whoever came up with this definition but I can’t find the reference to it right now so if you email me I’ll be sure to include your name.) Examples of platforms that we know and love are Facebook, Twitter and Jajah. The important thing is that by using Platforms, APIs and the developer community operators can ensure that the remain relevant in the new communications paradigm and leverage innovation from beyond their own organisations.

A lot of this value creation today emanates directly from software. Telcos have got to learn to master software and not be overly reliant on others to do this for them. Delivering new products and services means they can’t just be picked up off-the-shelf and creating them requires in-house teams working in close collaboration with all parts of the organisation. (Please note that I said a lot of the value comes from software, not all of the value).

It’s not over just yet

Even though operators haven’t been entirely successful creating new products and services to date, that doesn’t mean its over just yet and being the optimist that I am, I think operators can still execute in way that not only uses platforms and exposes capabilities via APIs, but also sees them directly using the same capabilities to create customer value propositions to reduce time to market and cost, as well as bringing new innovations to the market. The execution strategy has to outline how you:

  • Attract the right talent and people into the company – lots of the creative people you need don’t naturally gravitate to large corporates. People need to “get” the new world of the internet and embrace it, seeing it as an opportunity. Just because someone works in IT doesn’t mean they “get it” – sorry but all techies aren’t equal.
  • Allow people the freedom to create – creativity can’t just be planned or switched on, it has to be nurtured. Freedom to create also means using different approaches and breaking some of the old rules that exist. People have to be allowed to try new things and the organisation has to ensure that constraints are not placed on things because it doesn’t fit for example with the “brand” or it might be risky. People also need to be given time to do things beyond their day job. A big killer for creativity is not having time or feeling pressured.
  • Allow people to work outside of the old culture and processes – the culture and processes in most operators is finely honed for their existing business models not the new world that operators need to embrace. Operators need to figure out how they retain the old culture and practises for the core business, but then create a ring fenced capability to help build out the new world that isn’t constrained or compromised by the core business.
  • Set aside money – Of course all of this effort requires cash. O and by the way you need to take a punt and stop the urge to carry out long range planning activities for everything.

Easier said that done right? Well unfortunately these are very significant challenge and they’re not easy to overcome. It will require people in the boardroom to champion some of these changes. It’s worth noting that these challenges aren’t unique to the telecommunications industry. Many industries face (and have faced) the same dilemma as the world around them changes and  innovators enter their industry to eat their lunch. Tackling these challenges is an imperative or operators could end up watching a car crash….in slow motion.

Changing preferences from 15-25 year olds