This past spring, telcos and their suppliers gathered in Monte Carlo for some high-stakes activity that had nothing to do with baccarat tables or roulette wheels. The focus of their top-level pow-wow was IP Multimedia Subsystem (IMS) – the technology that most big telcos and their technology vendors had once identified as the industry-saving technology that would enable network operators to create more IP applications more quickly, and finally escape their dangerous dependency on a handful of commodity services.
Despite the tony location, the vibe at that Riviera meeting was distinctly downbeat. In half-empty rooms, few seemed eager any longer to present IMS as the cure-all for telco ills. Instead, speakers focused on the many barriers to IMS deployment. Equipment makers, telcos, handset vendors, and standards-setters argued openly about who was responsible for the sluggish adoption of IMS, and some suggested that IMS would play a much smaller role than telcos had previously hoped.
Just four weeks after the Monaco affair, in a conference room 6,000 miles away in San Francisco, Facebook founder Mark Zuckerberg was unveiling Facebook Platform, a new version of the company’s applications environment that enables people with the most rudimentary software skills to create new services and embed them into the Facebook site. The new services enabled by Facebook Platform include the kinds of mobile and video applications that telcos themselves would dearly like to supply.
These two very different events reveal plenty about the crisis facing telcos as they try to adapt themselves to an emerging all-IP service environment. Telcos are only too well aware that current services – especially telephony and Internet access – face a long, slow decline, and that they need to launch other services if they are to retain customers and maintain revenue streams. The underlying problem, though, remains unresolved: How they are going to build those new applications as cost-effectively as those who are already building to platforms like Facebook?
The answer to that question will have a huge impact on the shape of telcos in the coming decade, and on the services they provide. Right now, the one thing that's clear is that the future of telecom network operators has never been more uncertain. That uncertainty is likely to have a big impact, not only on telcos, but also on their enterprise customers.
The issue is essentially of Supply Chain de-coupling.
An internet user uses a PC/laptop/mobile phone (not built by an ISP), to connect to a local ISP, uses the applications built by some other company & hosted in a different country.The internet users also end up paying spearately to different parties for services & bandwidth.
While this model allows quick growth & variety of applications, profitability is a BIG question mark! On this model it is difficult to make money & prevent me-toos.
On the other hand, on a typical telco, a user uses a mobile phone sold by the telco,
accesses the same telco's bearer to use the services & applications that are usually built by the same telco. But this is changing: MVNO (mobile virtual network operator) & application stores like Iphone store mean that the supply chain is not with one player only.
Telcos are realizing that their walled gardens might help in customer retention & retaining value within the company, but this wont help to increase the size of the pie. It gets difficult to direct users to use mobile applications that are few & older from the internet applications that are newer & also many in number.
Instead there is another challenge that Telcos should also take seriously. VOIP poses a bigger challenge to Telcos. Think of it: VOIP phones using WiFi are already there. In future there can be models with bigger screen sizes allowing to use internet applications like a PDA does. This would allow a user to do more without using a telco's network.
Now you do not need a VOIP phone or a computer to do VOIP. VOIP clients for popular platforms like Symbian & Iphone are already there that can let you make VOIP calls from your GSM/CDMA mobile phone. See Fring.com. These applciations increase the use of data services but cannibalize the voice revenue - the expensive international calls.
I would suggest that there's no evidence, that consumers would pay more for better voice quality, because (as far as I know) no one has ever done a serious consumer study of the issue.
I can say, however, from my own experience, that many people notice and appreciate the extra voice quality of a land-line connection to a cell phone connection. This suggests to me that people are sensitive to call quality.
It’s certainly a mystery to me why telcos haven’t improved
the quality of basic phone calls. Even so, I’ve seen no evidence to suggest consumers would pay more for basic calling, whatever their quality. What
they value is convenience, ubiquity, simplicity in interfaces… so they’ll use
their cellphone even when it’s more expensive to do so and the quality of the call
is manifestly worse. I do think telcos should stick to the knitting in the sense of enhancing the overall communications experience -- that could
pay dividends—but it requires a simple applications environment that allows them to experiment.
Telcos treat consumers with disdain. They do not get it and will have to partner with someone who does in order to be successful with consumers. Its not the technology that is holding them back, it’s the attitude.
The ThinkerNet does not reflect the views of TechWeb. The ThinkerNet is an informal means of communication to members and visitors of the Internet Evolution site. Individual authors are chosen by Internet Evolution to blog. Neither Internet Evolution nor TechWeb assume responsibility for comments, claims, or opinions made by authors and ThinkerNet bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose.
If you’re a slightly gray, mid-level manager who travels a lot, you may be on the way up and worthy of professional respect, but one thing you most definitely are not is “cool.” Still, while today’s youth may think you just crawled out of a paleolithic cave, there may be hope. The iPad from Apple Inc. (Nasdaq: AAPL) (supreme arbiter of coolness) just might make you older guys (or actually old guys like me) cool.
As we well know, the online echo chamber and its increasingly viral and social components can magnify the propagation speed and distribution of stories and rumors, whether true or false.
In his recent Congressional testimony, Dennis Blair, the U.S. director of national intelligence, stated that the U.S. is "severely threatened" by cyber attacks and that the recent Google (Nasdaq: GOOG) attacks should serve as a wake-up call.
Fatal System Error, the book just released by West-coast-based journalist Joseph Menn, is really a public policy statement written as a thriller for a wider reading public. UPDATED 2:45 PM
Smarter Collaboration: How to Thrive in a Challenging Business Environment Market conditions are changing faster than ever, and organizations need to improve their agility and adaptability in order to provide better service and improve processes. The ability to work with customers, business partners, and employees as effectively as possible - while at the same time holding down costs - is a key to success. READ THIS eBOOK
your weekly update of news, analysis, and
opinion from Internet Evolution - FREE! REGISTER HERE
Wanted! Site Moderators Internet Evolution is looking for a handful of readers to help moderate the message boards on our site – as well as engaging in high-IQ conversation with the industry mavens on our thinkerNet blogosphere. The job comes with various perks, bags of kudos, and GIANT bragging rights. Interested?
To save this item to your list of favorite Internet Evolution content so you can find it later in your Profile page, click the "Save It" button next to the item.
Research shows that the youth of today like Facebook – but not blogging or Twitter. Does that mean Facebook has won, or just that it's not yet out of favor? Will all the services we see today fade into Ovaltine-or-Wheaties status in just a few years?
What kinds of companies are doing the most innovation in the data center? Turns out it's midtier enterprises that are taking the "Just Right" approach.
Digg
Del.icio.us
Reddit
Email This
TWEET THIS
