Friday, December 30, 2005
Leading thinkers in their global marketing department have long complained that they are forced only to consider new services that can be delivered within 12 months, while the R&D functions look at future developments 3 years out. So there has been a gap between the two: defining services that can be developed and delivered in 1-2 year's time.
Why is this important for the IMS industry? Because 1-2 years out is prime IMS territory. IMS functionality, combined with other technical developments (handsets, bandwidth, federated identity standards, etc) will open up huge opportunities for mobile and FMC operators. To date the operators have not been geared up (process-wise and organisationally) to even conceive of what these might be and how to take advantage of them. Maybe Vodafone will be able to steal a march on their competitors via the FPU.
Participate in our Global IMS Attitudes Survey: www.surveymonkey.com/s.asp?u=909631592609
In the meantime, IMS Insider received the best possible Christmas present - a tremendous response from subscribers to the November edition of the IMS Insider Report (subscribe at www.ims-insider.com). It described in detail a future IP-based service for mobile operators that made the best use of IMS and ranked extremely high on our 'IP Services Revenue Scorecard' [see postings below for more on that].
"This really brings to life how we need to start defining future services and the role IMS plays," said one senior marketing manager from a mobile operator.
Less encouraging (and a bit worrying), however, was an email interchange I had before Christmas with someone from the vendor side - the IMS Marketing Manager of a major Network Equipment Provider (NEP). He hadn't read the November report - because he's not yet a subscriber and is currently considering it as part of a global licence deal - but he thought it was strange that we were focusing on an 'IPTV'-related service scenario. Surely 'IPTV' is not relevant to IMS today, maybe in the future?
I strongly agree with him that 'IPTV', as it's currently defined (ie. a direct replacement of terrestrial TV, with a few more interactive bits thrown in), is precisely NOT what mobile (or FMC) operators should be focusing on.
However, as we've been saying all along in this blog and in IMS Insider reports, we need to start thinking 'outside the box' about future services. We need to look at leveraging the unique strengths that mobile operators have (particularly as a nexus for real-time multi-service management), and we need to look creatively at how we can COMBINE and BLEND functionality to create compelling SERVICE propositions (some people call them 'customer experiences') that make MONEY. Today, all we see are trials of functionality (Push-over-Cellular, Video Sharing, etc) or attempts by mobile and fixed operators to copy other service providers.
Mobile TV is a case in point. So, as the CEO of UKTV was quoted today in the Financial Times as saying, it's like open-air sex... it's a jolly exciting idea, but not always practical.
So, for the November edition of IMS Insider report we created a detailed scenario for a future 'IPTV'-related service that was very practical...and profitable.
'Practical' because it enables the mobile phone to be at the centre of a highly profitable audio-visual value chain. 'Profitable' because it allows the mobile operator to generate significant new revenues by placing it at the nexus of a more exciting customer experience.
The service of enables the customer to preview new movies releases (anytime, anyplace, anywhere), share the preview with friends over other bearers and networks, authorise selection and payment, authenticate a download via DSL to home TV, access related promotions and pass feedback and preference updates instantly across the supply chain to make future offers more relevant. And, critically, enhancing this process is core mobile telecoms messaging and voice functionality.
This is an example of a combinational service that takes best advantage of IMS, and can be delivered to customers within the next 18 months by mobile operators. It goes well beyond current Mobile TV and IPTV offerings...
In December's edition of the IMS Insider Report (available to subscribers in early January) we build on this example to show how federated identity (see www.projectliberty.org for an overview of this concept) combined with IMS makes these sorts of services very attractive to operators.
Sunday, December 18, 2005
We'd love to get your thoughts via the survey tool below. It takes 10 minutes to do (I just tried it!). Please let your colleagues know about it as well and ask them to join in:
We'll publish a high level summary of the survey results in January, but we'll reserve a full report to all those who participated in the survey.
This was the stated context for the event: “Fixed-line operators in developed world economies are facing a future of little or no revenue growth as their traditional core voice telephony business is increasingly cannibalized by mobile voice. With no obvious single 'killer application' on the horizon, the challenge for telecommunications companies in 2005 is to develop and deploy new revenue-generating services for their markets.” (http://www.financialtimesconferences.com/pages/conference.asp?ecode=ZZ1108).
I’ve picked out below some of the sentiments that I think provide useful context for discussing IMS:
Welcome to the concept of ‘Broadband 2.0’: The digital networked home supporting multiple devices and applications (rather than the PC and dumb modem and some peripherals as per today). “Telcos will have to extend their presence into the home to gain visibility of the customer experience”, said a VP from HP.
“The internet would have happened without Microsoft or Google, but never without the investment that the telecom industry has put in”, said the President of Lucent Europe. The key question is: can the telecom industry really protect and monetise that investment.
Keep a close watch on BT’s 21st Century Network (21 CN) – BT’s move to a single IP platform, costing it $18bn, is the most ambitious project of its kind by any telco in the world, said the CEO of BT Wholesale. It has to do this because it is losing nearly $1bn every year in revenue due to price cuts due to competition, so 21CN, built on an IMS architecture, is key to creating cost efficiencies and opening up opportunities for new revenue sources.
Is Content King? - The Corporate Development Officer at Deutsche Telekom echoed the sentiments of his BT colleague. He said that the cost of DSL connection in Germany has dropped by 70% in the past seven months to reach Euro 4.99 flat rate!!
“You either leapfrog into ICT – into a software-based IP services model – or you defend your traditional telecom services until you die out”.
He agreed that while some content will be particularly compelling, it was not critical. “Distribution will be King”. DTAG is investing over $4bn in fibre to the kerb. The costs of the rights to soccer - $150m pale into insignificance.
IMS Insider will be tracking BT’s and DT’s progress closely as we see them both as bellwethers for IMS effectiveness.
Build the Application Developer Community – If telcos don’t have access to a large application developer community IMS will not delivery the promised benefits. Yes, IMS Insider agrees with this, but the current value chain is dysfunctional at present. We believe that Federated Identity provides the key to creating the sort of commercial ‘Network Effects’ that will fulfil the ROI promises of IMS and NGN. (December’s edition of the IMS Insider Report will look at the link between Federated Identity and IMS in-depth – subscribe at www.ims-insider.com. If you’d like to do some pre-research on this, see www.projectliberty.org)
Why invest in IMS? – The CEO of Cable & Wireless said: “We are offering IP prices for services to customers at legacy telco costs”. Sums up the rationale for IMS quite nicely.
Is there ‘market pull’ for IMS? – A usual objection to IMS (especially from marketing departments at present) is that the customers aren’t asking for the sort of ‘blended’ services that IMS could facilitate. They want things nice and easy. The Group Chief of Mobility and Convergence at BT backed up the view held by IMS Insider that this is not the issue.
“The industry is not doing a good job at relating technology advances to actual customer needs”, he said. “We need to make the end user benefits clear. We need to be better at translating what technology can do. It’s not about marketing pull [responding to what customers ask for], but about technology push [explaining to customers what technology can do for them].” Amen to that.
Why is the industry failing? The BT Chief’s view is that the telco industry heritage is not services, but network reliability. To increase innovation and fend of competition from new entrants who have more marketing acumen telcos need to be less concerned about cannibalisation in the short term when launching new products.
New Telecom Economics – Cap Gemini’s MD of Telecoms, Media and Entertainment talked about how new advertising models can recover lost revenues from VOIP. Although he doesn’t see any imminent collapse in the PSTN system, he said:
“We are at the cusp of a major transition in telecom economics. It’s now possible to enter the market [through wi-fi] with an outlay of $10m’s, which is peanuts compared to traditional levels of capex, and to break even with 10,000’s of subscribers.”
The Editor, IMS Insider
Wednesday, December 14, 2005
In the short term, as operators offer more SIP-based services, how do they help their customers manage the potential complexity of having more (and more complicated) numbers/URIs to remember/use?
Part of the problem is that senior management don't necessary appreciate the problem. So, my colleagues at our sister consulting practice, STL (www.stlpartners.com), put together this simple summary of the issue for their Operator clients to use with senior management:
Transiting to SIP-based services - Address and Numbering Strategy - How to make it seamless for our customers and business partners, and differentiate vs competitors?
- We [the Operator] are moving towards an IP-based core network, using IMS architectures.
- We are trialling basic SIP-based functionality with customers (Push to Talk, Video Sharing, Multimedia Messaging, Voice Enrichment).
- This functionality will be available on our own network only (ie. Won’t allow roaming).
- In 18-24 months we will be looking to launch more sophisticated converged IP-based services (via multiple bearers and devices) to compete with fixed and internet players.
- IP-services require a very different address/numbering system (SIP based) than voice (MSISDN based).
- Some standards bodies exist to help with the address and numbering aspects of this (eg. ENUM)
- SIP-based services make address/numbering much more complex and confusing for the customer. Technically, this issue has not yet been solved by the industry as a whole.
- Unless addressed quickly, customers will be required to have multiple addresses/numbers/identities for multiple IP-based services types.
- Customers are already demanding single address/number schemes to access multiple services across multiple networks – they will gravitate towards the Operators who can offer this.
- Third parties (content providers, business partners) will gravitate to Operators who have the most efficient way of delivering and charging end users for bundled IP-based services.
- Industry standards on these issues are not in place yet.
- Some solution vendors are selling proprietary solutions which may prevent us from creating scaleable IP-based service propositions in the longer term.
How can we differentiate vs competitors by creating an approach to address/numbering which is simple and effective for our customers?
Deal with 2 interrelated issues now, to avoid headaches later on:
1.) Plan how to help the customer make an easy transition to a SIP-based address/numbers system (MSISDN/SIP co-existence, roaming, number portability, etc.)
2.) Ensure our internal technology development and interconnect strategy is in line with this.
Create a Future Address and Numbering Strategy.
PS: For those wanting to get more into the technical aspects of this, I would strongly recommend an excellent blog www.voipandenum.blogspot.com.
Thursday, December 08, 2005
November's edition, out yesterday, which describes how to create and launch an IPTV-related IMS service proposition seems to have hit a nerve. (To access this, please subscribe at www.ims-insider.com).
Why? Looking through breaking news over the last few weeks, it's clear that things are hotting up in the industry...with significant implications and opportunities for IMS.
Using Star Wars terminology, there's the 'Attack of the Clones' - internet/IT/media companies encroaching on telco territory - and a quite a bit of 'Empire Strikes Back' - traditional telcos preparing furiously to avoid future commoditisation.
Speaking with our contacts in strategy departments inside Operators recently we're seeing that IMS is now starting to emerge from the technical and R&D closet. Senior commercial managers are starting to dust off and flick through the thick tomes on "The Role of IMS in the Future Converged Services" that were left on their desks by hopeful NEP sales people 6 months ago. We're starting to see marketing people being asked by management for their roadmaps for high bandwith propositions, and these people are crying 'help!'.
IMS is starting to enter to the mainstream as a critical enabler of future success.
Here's some of the context for this - news from November/December:
'ATTACK OF THE CLONES':
- The biggest news by far is the announcement of Intel's Viiv technology. This has the potential to disintermediate fixed telcos and cablecos from content - see http://www.telecommagazine.com/NewsGlobe/Commentary/article.asp?Id=AR_1435. Watch out for a marriage made in heaven (or an Unholy Alliance, depending on your point of view): Sony Ericsson putting Intel's Viiv chips into their handsets for seamless integration with Sony's new laptop, TV and IVE range, pumping in content from Sony Coporation and friends. And if this happens, the industry just changed!!
Other relevant news:
- Sony IVE (Instant Video Everywhere) range: integrating VOIP plus video calling into PC's (www.sonyive.com).
- NTL (UK cable monopoly) offers $1.4bn for Virgin Mobile (5th largest UK mobile network) to create quad-play giant.
- BSkyB (UK satellite monopoly) buys Easynet (broadband provider).
- Skype retails in Radio Shack, and bundles with Motorola Bluetooth headsets.
- Google launches first downloadable mobile app (Google Local).
- Nintendo offers free UK wifi access.
- Nokia to set up mobile phone TV service in China.
- UK train network to be fitted with wifi.
- Japanese ISP CinemaNow signs content deal with Warner.
'THE EMPIRE STRIKES BACK':
- 3 Italia buys TV firm
- Vodafone launches global Mobile TV
- Sprint Nextel sets up a separate subsidiary to focus on the government and enterprise markets
- BT to roll out IPTV in 'late summer 2006'
- BT launches VOIP service (to undercut Skype and help "sell broadband").
- Telecom Italia launches TV
- Swisscom launches Mobile TV trials.
- Shanghai Media Group and Shanghai Telecom jointly launch broadband-based TV service in Shanghai.
- Deutsche Telekom to bid for the television rights to the German national football league.
- Cingular launches widescale HSDPA services.
- Orange/SFR/Bouygeres found guilty of market collusion (The Empire Striking Back unsuccessfully!!).
- DoCoMo launches own credit card brand.
- KPN announces new 'selling services via the internet' strategy.
- Telus merges fixed and mobile divisions.
- Telefonica and China Netcom form strategic alliance.
I liked this summary of the Virgin/NTL deal by Ovum today (www.ovum.com). Note the bit I've put in bold - this is the key: "This deal would create the UK’s first quad-play company, putting together fixed, mobile, Internet and TV. Quad-play is becoming established in the US, where cut-price deals are starting to improve customer acquisition and reduce churn (for example, Sprint-Nextel recently forged a deal with four cable operators). However, offering cut-price deals to encourage customers to take a quad service is one thing. A much bigger challenge will be to generate value from actual convergence between the services. For example, TV and video on mobiles has yet to be proven in the market."
(See our 'IP Revenue Scorecard' posting on this blog and our November IMS Insider Report (www.ims-insider.com), where we show how to generate revenue from an IPTV-based service
For more detail on any of the news items above go to www.lightreading.com. For analysis of what they mean to the industry and the implications for IMS, please email me:
Monday, December 05, 2005
In my recent web trawl for IPTV news and articles - to support our focus on a hot IPTV-related IMS-enabled service that we describe in November's IMS Insider Report (www.ims-insider.com) - I found a huge breadth of activity. Our view (see Friday's posting about the 'IP Revenue Scorecard') is that telcos will not win in the world of IPTV unless they leverage their core strengths and integrate communication and messaging and personalisation elements into their IPTV-related services to create compelling and valueable customer propositions. Just trying to ape the broadcasters just won't work.
Here are some examples of what's going on around IPTV at present. More analysis on this to come:
- Telekom Austria is readying a budget of Euro800m ($943m) for its soon-to-launch IPTV service, aonDigital TV. Helmut Leopold, Head of Platform and Technology Management at Telekom Austria told TVI Daily: "Ahead of launch we now reach 80% of Austrian homes. When the service launches at the start of next year we will launch 45 free-to-air channels and 15 premium channels."
- Shanghai IPTV service launched: Shanghai Media Group and Shanghai Telecom have jointly launched broadband-based TV service in Shanghai. The IPTV network is planned to cover Minhang District and Pudong New Area where millions of people live. The service will charge 60 yuan (E6.28) a month. The companies are trying to reach 10,000 subscribers within the year and expand the network to cover the whole city in the middle of 2006.
- Telecom Italia’s Alice Home IPTV service brings movies, sport, news and music down the telephone line into people’s homes, along with broadband websurfing. Telecom Italia’s TV on the Internet (IPTV - Internet Protocol TV), enables access to movies, sports, news, music and Internet content directly via the TV at home. After the successful trial of the service in around a thousand Italian households, Alice Home TV will be launched in 4 cities across Italy (Rome, Milan, Bologna and Palermo), reaching over 2 million households.
A huge amount of content is available for IPTV, and the operator 3 in Italy has even bought a TV channel to produce content specifically for its IPTV offering:
3 Italia Buys TV Broadcaster: Now First Euro Hybrid Mobile TV Co
In a sure sign that TV to the mobile is the new European media battleground, 3G mobile operator 3 Italia have announced its plans to purchase the Italian national broadcaster, Canale 7. Reports have put the price of the acquisition at between €30-35m.
The addition of Canale 7, Italy’s fourth largest broadcaster, gives the company access to the country's existing home TV business. Canale 7 currently broadcasts in analogue to around 40% of Italy, predominantly its north. More interestingly, it also has a terrestrial digital TV nationwide network operator's license. This should provide coverage for over 70% of the country.
It is expected that 3 Italia will work to develop a Pay-TV and interactive services proposition for handhelds. We also understand their intention would be for Canale 7's nationwide digital project to be integrated with 3 Italia's UMTS mobile network to create a DVB-H network.
The company intends to offer a DVB-H mobile TV service from the second half of 2006. Indications are that there will be a minimum of 20 channels, although no line up has yet been decided. 3 Italia already carries Playboy adult entertainment and football via existing technology, and has worked with Mediaset and News Corp's Sky Italia pay-TV operator.
Operator 3 Italy's screen shots:
Watch this space for more commentary on IPTV and IMS
Friday, December 02, 2005
In the October Edition of the IMS Insider Report (http://www.ims-insider.com/), we introduced a framework for prioritising IMS-enabled services called the ‘IP-Services Revenue Scorecard’.
This created quite a buzz with our subscribers and some of the Operator marketing departments we’ve been talking to over the last few weeks.
Clearly there are lots of cost saving and operational efficiency benefits to come from IMS – speed to market, lower provisioning costs, simplified billing, common infrastructures and so on - but the $64bn question is:
“How do we define what services we should be developing and provisioning and how do we go about building them?”
Trials of Push to Talk and Video Sharing are all very well, but where’s the sustainable service revenue really going to come from?
Our scorecard looks at the following seven key issues and, using a special algorithm, gives a weighted score for each prospective service proposition:
- Adoption potential by existing customers
- New Customer Acquisition
- Customer Retention
- Chargeable Usage levels
- Existing Service Usage Stimulation
- Usage Substitution (other providers)
- Potential Cannibalisation of Existing Services
In the October edition of the IMS Insider Report we looked at a Top 5 list of service categories for IP/IMS-enhanced Converged Services and mapped them onto the Scorecard. In the November edition (out on Wednesday – subscribe at http://www.ims-insider.com/), we drill down on a specific service proposition – in this case an IPTV-related one.
How did we get to an IPTV-related proposition when it doesn’t map directly to our Top 5 service categories?
The answer is instructive for all those trying to define IP/IMS-related services, and builds upon my colleagues’ past experiences as market proposition developers for telcos.
A proposition is about how Operators combine functionality to create a unique, differentiated and targeted user experience. The permutations for propositions are endless. In our IPTV-related one we believe we have combined elements of the Top 5 generic services to produce a potential winner.
Many mobile operators around the world have launched 3G TV services in recent months. However, this has mainly been a broadcast model with some downloading/streaming of video clips, rather than a full IPTV experience with its associated benefits of personalisation and video-on-demand (VOD) functionality. Fixed operators have moved closer to a true IPTV/VOD service owing to the greater bandwidth available on fixed networks, with operators like BT trialling an IPTV/VOD service and looking to launch commercially in 2006. However, while progress has been hampered by technical considerations the bigger challenge has been how to carve up revenue amongst players in the value chain and how the Operator will generate revenue. (See today’s posting on the IPTV market for more background).
The IPTV-related proposition we’ve defined fits the following criteria, which we think are critical to help Telco Operators differentiate and play to their strengths:
- Integration with core telco communication and messaging services (the telco differentiator)
- Strong Personalisation aspects
- Device Agnostic (mobile handset, desktop PC, TV)
- Bearer Agnostic (mobile, broadband, cable)
- Broadcast-quality (of course)
We’ve also mapped out what elements of the service can be delivered today, within 18 months and within 24 months.
The chart below shows how the proposition matches against our IP-Services Revenue Scorecard. There’s a lot more science behind this but for here the evaluation is summarised by traffic lights (Red = Weak, Amber = OK, Green = Strong).
In speaking with Operators around Europe particularly in the last few weeks, it’s become even clearer to us that operators are quite advanced in terms of laying down the technology building-blocks to IMS. However, the area that all operators we have spoken to are struggling with (even if they don’t admit is publicly, which they don’t!) is in developing compelling proposition concepts and the associated organisation structures and processes AND underlying commercial agreements to delivery them.
We believe that new skills are needed for building medium term, value-based, IP-converged service propositions. These are different from the short-term, price-based, circuit-switched propositions we see today.
In the November Edition of the IMS Insider Report we describe these in more detail. This will be a theme we’ll continue with on this blog and in the Monthly Reports for subscribers.