Inside Track… Management World Americas 2010: A View from the Sunshine State
Management World Americas is over for another year… TM Forum recaps this year’s Orlando conference in this Inside Tracknewsletter article. According toe TM Forum, more than 1,200 attendees participated in discussions, conference sessions, debates and networking opportunities. One particular theme that permeated the event was cloud services. Martin Creaner, president of TM Forum, commented, “Last year here in Orlando, we had a major launch of our involvement in the cloud space, and this year, the cloud sessions [were] standing room only. It’s not only due to a growing importance of cloud services, but also the fact that service providers get the concept of cloud as an important part of reducing costs and as an enabler of this transformation to a new business model.” As Comptel’s recent Comptel User Group survey showed, Cloud certainly offers a great opportunity for service provides, but like any other service, it needs to be closely managed. If CSPs can’t define and deliver services efficiently, charge appropriately and keep customers satisfied, cloud will not be profitable.
Zippy’s Telecom Blog… Smartphones Generate Nearly 65 Percent of the World’s Mobile Traffic
According a recent Informa report, smartphone users generate about two-thirds of total mobile cellular traffic worldwide (this excludes mobile broadband traffic generated by laptops and other portable devices, as well as Wi-Fi traffic offload that make up most mobile phone traffic). Yet, only 13% of mobile subscribers use smartphones. Moreover, as smartphone users spend more time on the Internet, the traffic that each individual generates—or average traffic per user (ATPU)–will increase over the next five years by 700%.
What’s interesting to note is that other reports, like this one from Analysys Mason, suggests that there is no ‘mobile data tsunami’. Analyst Rupert Wood notes that mobile data growth is around 30 percent per year—not 100 percent like some of the wilder estimates have suggested. Rupert point out that it is still the PCs that gobble up the bulk of mobile data in Europe—not smartphones; This was confirmed by various service providers, including Vodafone, speaking at this week’s Broadband Traffic Management conference in London. However, this proportion is rapidly changing, as smartphone uptake continues to boom and PC mobile data flattens. Which figures do you think are the most accurate?
Connected Planet… GSMA: The Time Has Come for More Connected Devices
The GSMA changed its rules to allow for embedded SIMs that can be remotely activated. The wireless industry is a bit surprised by this announcement because GSMA decisions are driven by its mobile operator members, who, with the decision, may lose some control, such as locking people into their networks or having influence in the retail chain. Rob Conway, CEO and member of the board of the GSMA, believes that embedded SIMs will provide security and portability for consumers, as well as additional functionality for enabling new services, such as such as e-Wallet and NFC applications. This news may also allow OTT players, like Apple or Google, to embed SIM cards into their phones and cut operators out of the retail chain, since phones would be remotely activated for a carrier network via stores and points of sale. However, the announcement focused on the flexibility and innovations that its new “taskforce” (including includes AT&T, China Mobile, Deutsche Telekom, France Telecom Orange, KT, NTT DOCOMO, SK Telecom, Telecom Italia, Telefonica, Verizon Wireless, and Vodafone) can develop. What do you think of this change?
To judge from the numbers and the buzz, data traffic management is a very hot topic. This was the second outing for the Broadband Traffic Management show, and numbers had more or less doubled since last year, as the eyes of the industry increasingly turn to how the undoubted boom in data services can be turned into significant revenues.
In truth, the scope of presentations was a lot more than strictly traffic management; although a significant number of speakers examined purely engineering issues (with congestion in the Radio Access Network, a particularly hot button), while others (including Comptel’s Ihsen Fekih on Wednesday’s panel discussion) looked at the crossover between network and software solutions. The overall scope was much more about the balance of traffic, investment and revenue, or as Comptel puts it: balancing revenue, customer satisfaction and resources.
It was interesting that almost everyone is still starting from the same point. That familiar slide, which shows the cost of supporting traffic volumes diverging from anticipated revenues, has become more or less iconic (to the extent that you need only to see its shape to get the point), but it came up many times, usually accompanied by a wry smile on the part of the speaker.
But across the two days it was clear that emphasis is now on using the levers of control and charge much more to encourage and allow use than to deny access—not least because traffic patterns seem to be swinging dramatically away from peer-to-peer dominance and towards a more mass-market, consumer-oriented pattern of use dominated by Internet access and content download. The real pressure on networks is from video-based services (primarily YouTube) and streaming media from providers, such as the BBC and Netflix, used by a wide consumer demographic—not just teenagers exchanging illegal games, movies and music. This looks certain to accelerate with the increasing penetration of more powerful smartphones and highly portable tablet devices.
It could be that we’re already moving from Policy Control 1.0 to Policy Control 2.0 in a way which is almost philosophical. Where the first wave was dominated by the need to control (and indeed deter) the use of data services, the second is about taking a much more liberal approach which encourages data use but aims to flatten out peaks and troughs in demand, spreading usage more evenly across networks, geographies and timespans to allow a much better return on capital investment. A number of speakers indicated how solutions to traffic management are by no means all about smarter and cheaper engineering. Good business analytics are key to a better understanding of customer behavior, and can be used alongside levers, such as variable charging, usage control and targeted promotions, to shape usage and maximise return. Taken alongside a number of parallel approaches which are finding real economies in the engineering of data networks, it’s starting to look like gold could be buried in those mountains of data after all.
Last month, Comptel and partners Cisco and Alcatel-Lucent led an interactive session at the Comptel User Group (CUG). (We also captured snapshots of it, as well as some of the presentations and attendee testimonials, in the following video.)
During the interactive session, we polled the approximately 100 telecom executives in attendance on their perceptions of new technologies, like cloud, LTE, M2M and third-party applications, and the consequential impact on communications service providers’ (CSPs) business models. After analysing the data, we wanted to share some of the interesting survey findings.
Nearly 60% of attendees considered LTE-enabled mobile broadband to hold the greatest potential for transforming CSP revenue models over the next 18 months. Interestingly, both the Cisco and Alcatel-Lucent representatives on the panel, when asked to comment, said that they see cloud and mobile data applications as the killer revenue drivers.
Meanwhile, some OSS/BSS industry analysts, like Teresa Cottam of Telesperience, made the point that the responses would be different if the CUG attendees were asked about the next 36 months.
So, we ran the vote again and saw that responses were much more fragmented; a third selected third-party applications and content, a little more than a quarter chose LTE-enabled mobile broadband, and only a share of votes went to M2M and cloud.
The conclusion from the panel and from other commentators was that LTE will lay the grounds for new business models, hence the short term (18 months) bet on it and the longer term belief in cloud, content and M2M.
Other feedback to the CUG survey revealed that:
In terms of revenue erosion, 60% of attendees thought that LTE-enabled mobile broadband will significantly wear down the revenues of fixed-line businesses, while 40% of respondents said that the impact would be marginal.
Three-quarters of respondents mentioned that they are either already working with third-party application and content providers (ACPs) or are planning to within the next 12 months. All respondents expected CSPs to be working with third-party ACPs within the next three to five years.
Finally, 97% of CUG attendees responded that cloud services will definitely generate revenues, but only 22% noted that these will be significant for CSPs. Most (59%) concluded that cloud services will result in relatively modest revenues for CSPs.
Overall, operators seem to be optimistic about the impact of new technologies but are unsure as to how these will translate into new revenue streams.
We’d love to hear your thoughts on the CUG poll results—do you agree or disagree with any of the findings?
To briefly summarize, Comptel and Axtel outlined how to do more with less. We worked with the communications service provider over an eight-month period to consolidate its five mediation and provisioning systems into a single, convergent platform—all to enable Axtel to roll out WiMAX and FTTH. And, in the end, we helped to not only deliver an on-time, on-budget project, but also prepare Axtel for next-generation network technologies, reduce its operational costs by 30 percent and improve its business agility.
Like Keith Willetts said, cost-cutting measures such as OSS consolidation are important for alleviating the squeeze on revenue and margins. It is also critical for improving efficiency (resulting in fewer processes) and taking friction out of operators’ businesses (leading to more flexible and responsive service development and improved customer support).
Comptel hopes that those in attendance at Management World Americas enjoyed our presentation and Operational Excellence Summit track. We invite you to leave a comment with any thoughts or questions.
The communications industry is changing—revenues from traditional voice and messaging services are declining, and at the same time, consumer demand for bandwidth is proving to be insatiable. As mentioned yesterday, TM Forum is examining this conundrum and the steps communications service providers (CSPs) need to take in order to beat the revenue crunch at Management World Americas.
First to provide some perspectives on the issue was TM Forum chairman and CEO Keith Willetts, who noted that it is actually more of a margin crunch. While executives are immediately inclined to cut costs, he explained, it isn’t the only answer to level the playing field. CSPs must not also forget about the customer experience and business growth.
Mr. Willetts went on to discuss the importance of back office simplification, business process standardization and network / system evaluation (topics that will be covered in greater detail throughout the week) in addressing the challenges presented by the crunch. These, plus the intelligent application of IT, are required in order to do more—faster and cheaper. And, the smart pipes are those that glue useful technologies like SOA together, thus enabling smart services and smart business.
The keynote concluded with a look at what Mr. Willetts sees as the next big thing for enabling the digital economy. He noted that there is significant potential for a federated set of CSPs that can develop a trading platform (whether it be content, cloud services and more) for business—much like Amazon’s concept. In addition, those that can reach into the OTT part of the value chain—and extend what they currently do well—will be best positioned to offset declining revenues and diminishing margins.
What do you think of TM Forum’s perspectives on the revenue crunch?
As for Management World Americas, this year’s theme is “Beating the Revenue Crunch: Smart Pipes, Smart Services, Smart Business”. And, TM Forum has put together an impressive keynote program that will debate the business and technology decisions communication service providers (CSPs) have to make in today’s world, where traditional voice and messaging services are declining and the explosion of data offerings is failing to deliver matching revenue growth.
Some of the questions that will be tackled by highlighted speakers including our partners IBM and Alcatel-Lucent—where, how and when should our industry reposition itself, and to what? Is the future one where today’s CSPs become service-enabling ‘smart pipes’ and deliver an array of new retail brands, or is there still a strong role for telcos as retailers? What would that change entail?
In less than a week’s time, AfricaCom (taking place 9-11 November) kicks off in Cape Town, South Africa, and Comptel will be there at stand D9 (opposite the coffee point!).
The organizers, Informa, are claiming that this year a record 4,200+ attendees from more than 1,500+ companies have registered—up 70% from last year.
From a biased perspective, I would like to think that holding this event in beautiful Cape Town (which IS Nice!), has something to do with this increase, but in reality, I suspect it is more a reflection of the rapid growth of the telecoms sector in Africa.
The temptation is to say growth = money for events…but I believe this cynically oversimplifies the value operators get from an event like this.
Growth has also meant increasing competition with everybody wanting a slice of the pie, so I suspect operators are primarily attending to find answers about how to generate and manage new revenue streams and cut costs in order to ensure future growth.
African operators need to grow their revenues from services (e.g. data and VAS) in the face of declining voice and SMS margins. For operators with OSS heavily geared towards simple voice and SMS services, an increasingly complex service portfolio brings many new challenges with respect to designing, launching and managing them. Comptel has seen a lot of interest this year from African operators in its catalog solutions for helping them get new services to market more quickly and cheaply, and managing the increasing service complexity.
There is also a non-growth-related challenge that needs mentioning, and that is one introduced by the legislation being enacted across Africa requiring operators to identify subscribers prior to their SIMs being activated. This shatters the current operating model of simply bulk pre-provisioning SIMs and introduces the challenge of only activating them after subscribers have been identified. It also presents operators with the ‘opportunity’ to leverage a closer relationship with what was previously a largely ‘anonymous’ subscriber base using ‘one-size-fits-all’ packages. Comptel has also seen a lot of interest in its dynamic SIM management solution, which helps operators comply with the legislation, cut costs from SIM wastage and leverage the legislation to actually get additional revenue streams.
So here’s to problem-solving at AfricaCom. Hope to see you ‘here’.
I have to say, I am really excited about joining Comptel. It’s a company I know well, not least because I was on the board between 2007 and 2008. Comptel is a company with a great history and, I believe, a great future.
A few words about my background. Since 1999, I have been working in telecoms at Nokia and Nokia Siemens Networks (NSN) in various roles.
At first, I was involved in an internal start-up looking at wireless broadband access. Then I moved into sales and marketing, focusing on growing Nokia’s business in emerging markets. After that, I moved to services to help fix some major problems with customer satisfaction.
Shortly after the creation of NSN, I took over the responsibility for the OSS/BSS business. This was one of the global businesses in NSN and meant heading up a unit with people across the world, mostly software R&D but alsocustomisation services.
Finally, at the start of 2010, after a reorganisation, I became head of the newly created OSS business that included all services and third-party software. I have also been on the board of TM Forum in 2008-10.
I have had the opportunity to see and experience a lot of things in telecoms. And now, I have been given a chance to apply that experience to running one of the best known independent software vendors in the OSS business!
Comptel is a recognized player in the industry. It has a good product portfolio, especially with the acquisitions made in the last few years. I also think Comptel has solid financials, despite the challenging Q3 results. And I believe Comptel has taken positive steps towards working more with partners. But most importantly for a business in this knowledge-intensive industry, Comptel has some very good people working for the company.
In short, I think the fundamentals are good; the right building blocks are there. So right now, I just can’t wait to get going!