Category Archives: Telecom

Why as a consumer you prefer OTT

DigitalConsumerSpending

Digital Consumer Spending for a cord-cutter.

I spend $40 a month on fixed broadband. That includes a bundle for voice minutes that you can’t opt out of.

On mobile I pay another $40 a month. You get a bundle of 500 minutes and mobile broadband for 500MB. I’d like to opt out voice, but I do not dare to because mobile networks coverage is far more reliable for voice than for data, and because of the cap in mobile data. That might change one day with LTE.

But I digress, let me go to he point. At $80 a month, you pay almost $1000 a year to a telco for connectivity —although that includes voice too.

How much do you pay for the services that connect you to friends, store your files, let you share your photos, videos, ideas? In other words, how much do you pay for Gmail, Dropbox, Google Drive, YouTube, Maps, iCloud, Whatsapp, Instagram, Skype, Twitter, Facebook and Linkedin? Most likely you pay zero, unless you are one of the few paying premium upgrades.

And the best part about all these Internet Services from the cloud, is that no matter what telco you choose to churn into, all those services follow you. Without any migration, without you noticing any impact.

Why would you want any of these services to be attached to a telco? Why would you want to hinder your bargaining power for the bulk of your digital expense, connectivity?

If your services are over-the-top (OTT), decoupled from any telco, you are free to bargain for a lower price for those $1000 a year you pay them. As a consumer, you prefer the telco to be a commodity. That gives you buying power.

Add to that a history of telcos abusing on roaming fees or with the expensive mobile data packages of early days. For many people, the perception is that telcos charge you for what Internet players give you for free. Leave aside that Internet startups have beaten corporate R&D departments on innovation, seen from the consumer angle.

Consumers see OTTs as a way to counter balance the historical telco power. Same goes for Cable.

This is bad news for telcos, in the long run. As of today, telcos still grab the biggest piece of consumer spending in Digital. The problem in the long run is that as connectivity gets commoditized, all the new services with their promising revenue will be OTT.  For a telco there are two options, either playing the OTT game too, or prepare to run the business as a pure utility.

Enhanced by Zemanta

Clouds and Pipes

Telefónica Distrito C Madrid España - Spain

Telefónica – Spain (Photo credit: Wikipedia)

Clouds and Pipes. That’s what telecom has become. Services go over-the-top (OTT) and telcos provide connectivity. Telcos have fought a battle for more than a decade to retain Services and they lost. Only Voice and IPTV represent significant business other than connectivity.

Not even the assets they had at the time of the first cloud and pipes post are an advantage anymore:

  • Telcos do not have a billing relationship any better than iTunes/App Store, Google Play, Skype and many other OTT.
  • Telcos brand is perceived by consumers as ‘you-pay-for-all’ vs Internet freemium everywhere.
  • The only reason voice is still with telcos is because of clever bundles of minute plans. And IPTV in most markets resulted in a must-have bundle just to sell broadband.

Telefonica does well to try and play the OTT game too with a separate entity, Telefonica Digital. It’s the only chance to be anything other than a pipe.

As per RCS, forget about it. This was invented when Nokia ruled. In a post-iPhone world with Facebook and Twitter native support, what does RCS has to offer to a user?

Update: Check out Telefonica Digital Tu Go. That’s a good example of making OTT work for a carrier.
This app enables you to have OTT voice with your phone number when on Wifi. That is a far simpler and lower cost approach to poor 3G indoor coverage than deploying femto-cells.

Coming soon:
Clouds and Pipes: The End of Telecom as we knew it.
You can get an early copy of the book and contribute with comments by subscribing to the blog by email.

 

Enhanced by Zemanta

M2M: What is the threat for telcos?

ntt-docomo-logo-crop-1

M2M is not taking off as fast as operators would like.
But the threat for them is not about failing to reach billions of devices talking to each other, as M2M promises. That will surely happen. The threat for telcos is that they might not be the ones to control and manage them.

Cheap WiFi modules combined with the nature of IP make Over-the-Top solutions as effective as any other, if not more. For customers, OTT has the advantage not to lock them to a single connectivity service provider.

Telcos know it. More and more, they will have to do as DoCoMo just did, and aim to play over-the-top. It is the right move. Telefonica has done it in other domains with Telefonica Digital by creating a new umbrella brand called Tu, for over-the-top communications services.

The point is not that telcos cannot rule in M2M. The point is that it is unlikely you do, if you just focus on locking M2M Service with Connectivity, as telcos did in the days of voice and VAS.

 

Enhanced by Zemanta

What’s behind Mobile Payment success in Asia?

When you look to Asia to replicate the success of Mobile Payments compared to other regions, you need to know what is behind. The success comes from two totally disparate markets that have little in common among themselves, and with the western world.

1. Emerging Countries.
A few years ago I visited a good customer in Cambodia. They were the leading mobile operator in country and we were discussing the upgrade of the Prepaid platform we provided. I was surprised when our country manager took me to meet the CFO and not the CTO or CIO. Why was the Prepaid platform under the management of  Finance? The CFO himself answered: The country had a total of 40.000 bank accounts, while they already had 2 million prepaid mobile users and growing. In Cambodia everyone had a mobile phone, but only a few of them could afford a bank account. Their Prepaid Accounts had transformed into Mobile Wallets.  People had started to use Airtime Transfers as a method of payment. The mobile operator was also becoming a new sort of ‘bank.’  The technical solution was based on simple USSD transactions.

The story shows that a large number of Prepaid users with ARPU‘s under $10/month will make the statistics to Mobile Payment users.

2. Japan.
I lived a few months in Tokyo. A few days after you land you realize you need a Suica card. The Suica card is a RFID wallet card that is ultra convenient when you use the wonderful railway and metro system in Tokyo. Taxis are very expensive and having a car too. Soon you notice everyone has one Suica card, only if to use the public transport system.

With eveyone carrying a Suica card, you understand why most convenient stores and any merchant that receives small payments in cash accepts it.

On the other side, the handset ecosystem in Japan is totally different from the rest of the World.  The handsets that Docomo and KDDI provides are still specific for Japan (only after iPhone 4, Apple is making significant inroads in market share). Therefore for phones to support Suica, it was only a matter of Docomo and KDDI agreeing with Suica to link their balances.

In short…
Mobile Wallets in emerging market are filling a need we might not have in western countries.

You can learn from Japan experience. Just be aware it is a market with many specificities, and that a big driver for adoption was the wide use of public transport.

key-facts-about-mobile-payments
You will find more statistics at Statista

Enhanced by Zemanta

How is ITU different from a dinosaur?

Tyrannosaurus rex, Palais de la Découverte, Paris

Tyrannosaurus rex, Palais de la Découverte, Paris (Photo credit: Wikipedia)

How is ITU different from a dinosaur?
Answer: ITU is not extinct yet.
On the rest, they are the same: Fossilized, old, heavy, slow.

We don’t know if dinosaurs noticed the meteorite that disrupted their world and, some say, led them to extinction.

What we know is that ITU don’t want to notice the meteorite that is leading them to irrelevance: the Internet.

These persistent attempts are just evidence that this breed of dinosaurs, with their pea-sized brains, hasn’t figured out that they are dead yet, because the signal hasn’t traveled up their long necks.
— Vint Cerf

#FreeAndOpen Take Action

It’s time that an organization like ITU, that has done so much for the development of telecom over almost 150 years, adapts to a new world, where they no longer have the control. Else they will end like dinosaurs, extinct.

Enhanced by Zemanta

iPad Killed Wireless Unlimited Data Plans

With the coming of the iPad, we started to hear about MiFi, tethering and mobile hotspots.

The case for the MiFi is simple. You pay a single data plan for your MiFi (or your smartphone with tethering), and there you connect all your iPads, laptops,  iPods,  and any future connected mobile device with Wifi. As LTE comes, you just get one unlimited LTE data plan for your MiFi and that is all you need from the Telco! A single pipe that you take with you anywhere!

Heaven for the consumer!! Hell for the Telco!!

Still wondering why AT&T, Telefonica O2, Vodafone and other telcos STOPPED offering unlimited data plans soon after the iPad arrived? They have four good reasons for that:

  1. The obvious: Tiered plans avoid heavy users to congest the network  (e.g. with P2P traffic). It also creates affordable plans to lure more users.
  2. The not-so-obvious: video is what drives traffic volume. Capping give telcos an (unfair?) advantage to distribute video content, compared with over-the-top. Example: Let’s say Verizon offers 1 GB data plan for your iPad and a Video-On-Demand App to stream all the movies you want at $8/month. The movies that you see with the Verizon App do not count for the 1GB monthly limit. Would you take Netflix at $8/month, considering it will soon kill your 1GB limit? Or do you take the Verizon video App?
  3. The real game: Telcos want you to get one separate data plan for each mobile connected device: One for your smartphone, one for your laptop, one for your iPad, one for your connected car, one for each of the future Machine-to-Machine connected devices. Telcos will bundle packages, but they want you to value each device connection with its plan and its cap.
  4. Protect Wireline: Telcos must avoid that LTE replaces the Wireline broadband connection. All fiber investment and IPTV play could go to waste if put to compete with 100Mbps+ Unlimited LTE plans. The easy differentiation: Wireline broadband is unlimited. Wireless broadband is capped.

The telco end vision for a consumer:

  • One unlimited wired pipe for the home (bundling TV and TV apps)
  • Many capped wireless pipes for each of the mobile connected devices, phone, laptop, tablet, car…  (bundling TV and other value-added services)

How much is an Internet Visitor Worth?

chart-of-the-day-revenue-per-unique-visitor-google-aol-twitter-facebook

Google makes $18 a year for each unique visitor. Facebook makes roughly $3.

Three observations from the chart:

1)  Google is far ahead of the others in monetizing their visitors. A sign that search advertising is much better paid than display. Facebook will need to invent something to market their ads more valuable.

2) Recently a tier-1 telco CEO demanded that Google should pay telcos  for the business they do on their networks. The yearly revenues per broadband subscriber for a telco can reach $240-$400. What Google or Facebook gets from a single user is peanuts compared with what the telco gets. What portion of Google’s revenue they want to get?

3) By chance the revenue per user for Internet giants look in the same range as what a traditional  ad-funded broadcast TV channel makes per average viewer in a year.

It would be interesting to see how Hulu would do on this chart. According to Bloomberg, the Simpsons on Hulu command a $60 CPM, while on prime-time TV the same ad would cost $20-$40 per thousand viewers. If Bloomberg is right, considering that Hulu aggregates much more content than a single broadcast TV channel, with a higher CPM, we should see Hulu go off the chart!  Assuming it could reach $100-$200 revenue per user per year, that starts to look something on which the telcos might want to ask for a share…