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Wednesday, January 11, 2006

Top 10 Predictions for the Telco Industry in 2006, implications for IMS

(Continued thanks to those participating in our Global IMS Attitude online survey - link: http://www.surveymonkey.com/s.asp?u=909631592609. I can see the results as they come through - it's getting VERY interesting...We're keeping this open till the end of January. Full report for survey participants only).

IMS Insider's Top 10 Telco Industry Predictions for 2006

I'm indebted to Dr Kenn Walters and team at our sister consulting company, STL (www.stlpartners.com), for their Top 10 telco predictions for 2006. I've added the implications for IMS below each:

1. Content Providers becoming Virtual Network Operators (VNOs) and even Network Operators (NOs)

As demand increases for content to support new Broadband and mobile infotainment services we will see not only more partnering deals between operators and content providers but also a number of content providers investigating the possibility of becoming VNOs or even, through acquisition of small operators, NOs themselves. Disney, for example, is already making noises in this direction - creating a direct channel for their huge content catalogue of movies, TV, games and images and creating their own branded mobile phones. BSkyB in the UK recently bought broadband provider Easynet, which could be the first step in a not too dissimilar plan.

What this means for IMS: The need for faster and simpler Service Delivery Platforms and/or IMS systems to enable this content-driven converged world will be more keenly felt by commercial decision makers within Operators.

2. Emergence of VoIP VNOs and NOs

New VoIP and VoIP-based services in the fixed and mobile market will emerge with more deals like that between Skype and E-Plus in Germany. In particular watch out for partnering deals in local markets between VoIP providers, large IP-based content providers and second/third tier mobile and broadband operators, to offer low cost voice and conferencing services. These will offer flat fee and pay-per-use services and will provide a significant challenge to the traditional telcos, putting pressure on prices and responsiveness.

What this means for IMS: Faster and simpler Service Delivery Platforms and/or IMS systems are needed to enable and manage these cross channel services at extremely low cost.

3. ‘Converged Operators’ get recognized as distinct categories of telco players

There will be even greater pressure on operators to consolidate their markets, increase revenue per user through offering new services, retain customer control through penetrating their usage patterns, and more flexibly attack and defend against local competition. As a result more and more FMC (Fixed Mobile Converged), ‘Triple Play’ (FMC with either TV or internet added) and ‘Quad Play’ (FMC with internet and TV) operators will come into being. The ‘converged operator’ will at last be recognized as a category of player.

What this means for IMS: With Triple and Quad play operators on the increase, an increasing need to bring innovative services to market across all of the different delivery channels seamlessly, faster and simpler Service Delivery Platforms and/or IMS systems are needed to manage and enable this increasingly complex converged world.

4. New revenue streams begin to be discovered by operators offering advanced content

Operators offering IPTV, news services, search engines, video downloads and so on will begin to enjoy some new revenue streams, although the profits will be small. A few will begin to recognize the opportunity of enabling advertising to be linked to this content. This will start to generate new business models and help to reduce the cost of content. As Location Based Services begin to roll out in the mobile world, look for more of this and more pop-up advertising from local retailers.

What this means for IMS: The need for faster and simpler Service Delivery Platforms and/or IMS systems to enable this content-driven converged world will be more keenly felt by commercial decision makers within Operators.

5. 3G and WiFi ‘coopetition’

As 3G roll outs improve in terms of quality (especially for ‘in building coverage’) there will be greater competition with WiFi services. In 2006 expect to see more of the triple play operators partnering with WiFi companies, as well as integrating more of their own WiFi services (where they exist) into their core networks. 3G competing, but also cooperating, with WiFi.

What this means for IMS: As 3G mobile services increasingly work together with WiFi data services, advanced Service Delivery Platforms and/or IMS systems are needed to enable and manage these converged services while ensuring compatibility and seamless interoperability.

6. Vendors - Hardware Battles and Consolidation Continues

- Handset Manufacturers: Expect a shake out of suppliers in advanced handsets, with probably only 5 long term survivors (our guess is Nokia, Sony Ericsson, Motorola, plus one other). Expect the trend for low cost, low function, but ‘fashionable’ handsets from unknown Asian suppliers to continue for the consumer market. Expect the larger players to respond fast and hard with a slew of new budget handset ranges.

- Network Equipment: Expect acquisitions of well-established but poorly performing suppliers, possibly from Chinese companies, in 2006. It’s not unfeasible to see approaches to Alcatel, Nortel or even Lucent in the coming 12 months.

- IT Vendors: Expect more vendors to offer customers ever more aggressive pay-per-usage pricing policies (eg. $/CPU/GB/hour). Expect many more offerings of managed services to operators.

What this means for IMS: Expect more and cheaper IMS enabling hardware (and software) to become available from different vendors in both the IT/IP and NEP spaces.

7. A few NEPs make more revenue from services than infrastructure

Continuing the trends set by companies such as Ericsson, expect to see more NEPs (Network Equipment Providers) providing hardware-agnostic services to operators, acting as Consultants, Advisors, Systems Integrators, Hosters, in the same way IBM does in the IT field. Expect to see some of the leading companies already doing this derive more revenues from these services than from selling their own equipment.

What this means for IMS: In 2006, expect the larger NEPs to deliver more pilots and solution roll outs for the leading operators based around OSDP (open Service Delivery Platforms) and IMS.

8. RFID backlash

RFID gets increasingly linked in the public’s mind to ‘Big Brother’-type government spying stories by sensationalist media. This affects willingness to have RFID tags integrated into handsets.

What this means for IMS: Currently no negative effects are expected for Advanced SDPs or IMS due to this potential backlash, BUT, it is important to keep discussions about future IP-based converged services separate from RFID when dealing with Journalists or public forums.

9. Federated Identity comes out of the R&D ‘closet’

At the end of 2006 Federated Identity – “a way for mobile operators to securely and automatically broker customer identity information across a network of online service providers to provide a larger volume of personalised and relevant IP-based services to end-users without them having to undertake multiple log-ins with sign-ons” - becomes a mainstream topic of conversation for senior commercial management at mobile and FMC operators who are considering future growth strategies. Watch out for the results of the ‘Fidelity’ field tests in Europe between France Telecom, Amena, Telenor, TeliaSonera, Ericsson and others. (See this month’s IMS Insider Report,

What this means for IMS: Business cases for IMS investment can best be made in conjunction with planning around Federated Identity. Both are about ‘future-proofing’ mobile operators’ business. IMS will help the operator develop their own branded IP services and network capabilities, Federated Identity will enable it the operator be at the centre control point of a new value network. Both will become mature, from a commercial point of view, at around the same time (2007/8).

10. The organization converges

After years of working in silo’s, convergence will hit the organizational structures and processes of enlightened operators. Vodafone recently established a Future Products Unit, run by Global Marketing, to plug the gaps between traditional short-term product development, medium term network enhancements, and the crystal gazing of the R&D and strategy departments. We are seeing other FMC operators setting up new cross-functional central groups to define and prioritize IP-based services for 18-24 months out. Managing the change will not be easy, new skills will be needed, many will resist.

What this means for IMS: This is the critical change needed for IMS to deliver on its promise. It is critical that network engineers who are building IMS-based systems get much closer together with marketing, operations, R&D and IT functions.

Please send your comments to me at:

The Editor - editor@ims-insider.com

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