Tag Archives: applications

How will Telcos fill the pipes?

Telcos keep investing in improving their broadband networks: from ASDL to ASDL2+ to VDSL and now  Fiber-to-the-home (FTTH). FTTH will enable bandwidths in the order of 100 Mbps, both for downlink and uplink.

Telcos are investing important sums to bring fiber to the users: Verizon, SBC and BellSouth plan multi-billion dollars investments in the next three years. NTT has reached 9 million subscribers in Japan for FTTH and target 30 million in 2010.

How will Telcos get a return on this massive investment? What applications can they deliver to justify it?

1) IPTV. This is the obvious answer. High Definition video will be the killer app, not only for video-on-demand but also for broadcast TV channels and live events. To deliver a HD channel requires around 10-15Mbps. With the trend of multiple set-top-boxes per family (in the living-room, in each of the bedrooms, in the kitchen), FTTH will enable multiple HD streams to reach each STB in the home with a different program. 3D HDTV is still in early stage, but will also provide a compelling reason for users to demand fiber. 

2) Interactive TV applications. Benefit from the high-bandwidth return channel to provide interactive TV applications on top of IPTV, like TV portals or participation TV (voting, messaging or video calls). Interactive Advertisement is one of the most promising applications for generating revenues. Targeted, relevant adds can be a reality on the TV, as the telco can have a detailed profile for their users, even measuring the response to campaigns. Interactive Advertisement will enable users to respond to the ads, e.g. by providing an email address, subscribing to the BMW channel, purchasing the product from the TV ad, setting up a video call to a sales agent or simply recommending the ad to a friend. The possibilities are end-less, and the potential to generate additional revenues huge.

3) High-Def Videoconferencing and evolution to 3D HD conferencing. Once multi-parties calls are set-up, the demand for bandwidth multiplies

4) Wholeselling to Internet players, like Google, Yahoo or Microsoft. High bandwidth/QoS demanding applications could be sold by Internet players, including the bandwidth required to deliver the application, purchased from the operator as a wholeseller. e.g. Google Earth Premium providing not only satellite pictures but also high quality live video, Rhapsody music service evolving to subscription-based video and music service through a QoS-aware sub-network “wholesold” by the telco, Premium YouTube HD with connectivity sold by YouTube, etc.

Having a FTTH network can provide Telcos an important competitive advantage and the means to provide new applications we can not even imagine now. Telcos need to keep focus on developing these applications.

Another alternative, not to be neglected, is to ask for government funding, given the social benefits Internet clearly provides. Renamed in the past as the Information Highway, there is no reason we should not have toll-free Information highways too. It worked in Korea and other Asian countries. It is a matter of understanding Internet as another public infrastructure.

Note 2:
See what Samsung envisions as the Ultra-High Definition (UD) 3D.  At 4096 x 2160 resolution it will require 300 Mbps of bandwidth. Not even current FTTH will be enough.

iPhone: Friend or Foe? Can Mobile Operators avoid turning into pipes?

There are two major conflicting trends in Telecommunications :

1) Internet driven: the intelligence and applications move to the end-devices (Smartphones, laptops, Servers…)

2) Telcos driven: Operators need to retain control of the Services delivered through their networks

On example of these two trends are: Skype vs IMS.

Skype corresponds to trend 1). The application is running on PCs or handsets, and the Service is offered directly by Skype, independently of the Operator that provides simply IP connectivity.

IMS (IP Multimedia Subsystem) is standardized by the telco industry – 3GPP and others-. It aims at providing multimedia services over an IP network, with the Service fully controlled by the network Operator that guarantees reliability, interoperability with other Operator’s networks and Quality of Service. Something that Skype can not offer, due to the nature of Internet.

So far, Mobile Service Providers (MSPs) have fought to retain control of their services and to own the customer, while opening their networks to Applications partners.  MSPs have been relatively successful in monetizing all premium content services delivered through their networks, including: ring-tones, games, wallpapers, logos, videos, TV-shows televoting and other SMS premium services. This business model is based on revenue sharing with Application/content partners.

While MSPs have successfully keept Service control, the usage of mobile Data Services has not gone into mainstream yet, mainly because the data capacity offered by GPRS/EDGE was too limited and charges were too high.

With 3G and HSDPA widely commercial in many markets, MSPs re-position their Data Services as Mobile Broadband with flat fees, volume capped to avoid congested spectrum.

Some Operators see the increase in data capacity as an opportunity to sell more premium content than before, including bandwidth intensive video applications, or music -e.g. KDDI selling music, Testra launching a Rich Media video service for 3G-. But some other MSPs seem to be giving up, as they accept a mere Internet Pipe role and give away the applications to Internet players, losing any option to monetize those applications offered through their networks. e.g. MS messenger, mobile Gmail, Google maps or even Skype for VoIP… and iTunes for Music.

Mobile Operators have a trusted billing relationship with their clients which should enable them to easily monetize any Services accessible through the mobile to the clients they own.
That was the theory over the past years. In reality, today Internet players are also building a trusted relationship and do not need the Operator anymore.

MSPs worldwide rush to sign exclusivity agreements for iPhone launch, but apart for the short-term gain of signing-up the higher-ARPU subscribers that will own an iPhone, Operators are giving Apple the full control of the applications .

iTunes songs will be sold over the MSPs networks, same as it is in fixed broadband today. What revenues will the MSP get from those songs sold by Apple? Zero.

With iPhone, Windows Mobile and Android coming into the picture, the situation is not likely to improve for MSPs.

Mobile Operators will get a higher demand for flat fee Data Access, which is already  good, but they can start forgetting about monetizing premium content, unless they seriously invest to reverse the trend.

Fixed Broadband operators with IPTV, are showing that the trend can be reversed. As Telefonica’s Imagenio IPTV Service illustrates, the Operator can play a key role in content distribution over their networks. Again, it requires vision and determination, as Telstra, KDDI or Telefonica have, to transform themselves and become a player in the entertainment industry.