Monday, December 23, 2013

Service exposure as a way of realizing a two-sided business model

By exposing different network assets – for instance SMS, billing capabilities and call setup – operators could enhance their position in the value chain and create new innovative offerings. In this post, the main focus is on how the exposure of various voice capabilities could contribute to realizing a two-sided business model.

We explored the possibilities of a two-sided business model for telcos in a recent blog post. Among other things we discussed growing opportunities in verticals, such as learning and healthcare.

Apart from existing examples in the telecom industry, such as toll-free calls and emergency service calls, another way of realizing a two-sided business model is for operators to move into the area of service exposure – sometimes also referred to as network exposure or API exposure.

Operators venturing into service exposure must consider a number of basic questions before getting started: What capabilities should they expose and to whom should they expose their assets?

The first question is perhaps the easiest to answer: Operators must carefully consider what to expose so that they don’t endanger their own core business. This would be the case if an OTT player, with the help of exposed assets, could build a high-quality telephony service at a lower price.

When it comes to the “to whom” question, the main target group for exposed voice capabilities is the enterprise segment (and developers working at the assignment of companies). Assets are exposed to be integrated into enterprise business processes to help companies become more efficient.

When these questions have been answered satisfactorily, what would a possible two-sided business model based on service exposure look like? An interesting case is where a voice application, CRM system and customer support could interact.

For instance, an app developer working for a big insurance company has developed an intelligent form, which retrieves information from the company’s database. Customers can fill in the form on the company’s website and send it back electronically. 

Questions might arise when customers fill it in and by clicking a button inside the form the customer can come into direct contact with an expert at the company who can answer any queries. The expert has access to the company’s CRM system and can directly see the background information on the customer.

The operator makes sure that the voice application works seamlessly together with the intelligent form and the CRM system. In this case, the operator makes money on the assets exposed to the developer (for example, through a license fee) and the voice solution it sells to the insurance company. The insurance company, in turn, can decide that the “in-form” calls will be free of charge for its customers.

An obvious advantage for the operator with this set-up is that it can make its (voice) services more relevant and integrate them into additional communication flows. In this way, a two-sided business model can help operators reach beyond the limits of their existing business and participate in larger profit pools than those available in a pure connectivity market.

By Bodil Josefsson for the Voice on Telecom     

Monday, December 2, 2013

Four ways carriers can monetize WebRTC

In this blog we have featured several guest posts from Kelly Fitzsimmons, a serial tech entrepreneur and co-founder of the Hypervoice Consortium. The consortium has the mission of articulating and advancing standards, capabilities and potential applications for Hypervoice, or the transformation of voice communications into searchable and shareable native web objects.

Her latest post explored how to monetize voice in a WebRTC world. Now we're happy to welcome her back again, as she examines four ways carriers can monetize WebRTC. You can follow her on Twitter at @schnellerkeller


When it comes to WebRTC, carrier attitudes range the gamut. What remains consistent is that few carriers have a clear idea on how to make money in a WebRTC world.

At the root of it, WebRTC poses a particularly thorny problem. Historically, web applications – particularly fast adopting ones – have been free or, at best, freemium. But how can revenue from telecom services, such as voice, be stabilized or even grow when people expect it to be free? 

Once users expect free, the most obvious choice is to move up the value chain. Since the core service itself is now table stakes, the carriers have been asking themselves who would be willing to pay for a better version of it (verticals? enterprise? OTT?). And from that point, the next logical focus becomes obvious: quality of service.

That may be the obvious choice, but it is unlikely to unlock radical new stores of value for the carriers. It may stem the bleed for a bit, but there are other players already entrenched in these upscale value-added markets. The carriers risk both showing up late in the game and not being seen as an obvious brand choice.

So, rather than focusing on quality of service, perhaps a better question for carriers is: How are we uniquely positioned to generate radical value while working from our key areas of strength?

In spite of all the bashing today, carriers have many unique – albeit not all that obvious – strengths. For example, with some exceptions, carriers are masterful at billing. The telecom billing systems touch almost every human in the connected world, which leads to their next gift: distribution. From retail counters to the deployment of hundreds of thousands (possibly millions) of mobile sales representatives, telecom knows how to find you. 

And finally, telecom knows a great deal about you. If you have ever been lost, you have likely thanked the high heavens that you walk around with a GPS in your pocket. By linking location data to historical behaviors, carriers are uniquely positioned to help you find the things you want, when you want it, exactly where you are. And with mobile payments, carriers can help you seamlessly complete that transaction – without ever reaching for cash or a credit card.

In sum, telecom can touch, find and provide unique information about and to almost every human on the planet. Not even Google can make this claim, as the vast majority of the world has never been invoiced by Google – let alone seen a sales rep. (And not to put too fine a point on this, but even Google requires the carriers.) 

So regardless of how WebRTC shakes out, many of telecom’s assets are nearly agnostic to the outcome. That said, there are a few ways that the carriers can capitalize on WebRTC now that could pay off big dividends later:

OTT Reselling
By partnering with OTT to test out various applications, the carriers can use their sales and distribution assets to market test apps and watch which ones break through the noise barrier. WebRTC promises to make the app world a far noisier place, which puts the carriers in a unique position. Their distribution strength can help an app find an audience and allow, in turn, the carriers to identify winners early.

This strategy may involve OEM, white-labeling and just plain channel distribution. From a revenue standpoint, OTT reselling provides a quick new revenue stream. For example, today AT&T is reselling RingCentral’s Office@Hand, a simple cloud-based phone and fax solution for small business.

Note how neatly the pricing structure fits within AT&T’s monthly billing. Although net revenue is likely to be modest with apps like RingCentral at first, these reselling relationships could pay big dividends down the line if they:
1. help keep customers on the carrier billing systems
2. provide real-time due diligence to the carriers’ corporate development teams so that they can identify acquisition targets early (read: cheaply).

Core Services
Wouldn’t it be lovely if these new apps didn’t run on the web, but rather utilized the carrier’s core network assets? That is exactly what AT&T has done by partnering with Tropo, provider of the Ameche platform. Today, AT&T is busy building a developer ecosystem on its network. In this emerging model, developers win by being able to stand up apps with carrier grade service levels on the backend. Carriers win by collecting fees from Tropo and other Platform as a Service (PaaS) providers. (For more on this relationship, go here)

When combined with reselling, AT&T would generate a double bottom-line with third-party apps – once through reselling (that is, RingCentral) and then by collecting network utilization fees from the platform providers (that is, Tropo).

Sales Optimization
Thanks to all the network utilization data that the carriers can access, they are in a unique position to see sales opportunities no one else can spot. For example, a surge of calls happens at a customer company tripling their monthly call volume. Who other than a carrier can spot this today? If the carriers were selling apps to solve for call volume spikes, their sales resources could be deployed at the exact moment of customer pain with a helpful cure. In the land of sales, that’s called winning. With this strategy, the carriers would increase net revenue by reducing cost of sales, improving their win:loss ratio, and accelerating time to close.

Small Data
For a moment, let’s think beyond Big Data. Today, carriers possess meaningful Small Data – precise, scientific insights – that can be derived from how businesses are leveraging their services. Instead of being predictive, these consist of historical insights and/or content that is built up over time. If the resulting insights or archived data are meaningful enough, these types of services could become quite sticky. In short, customers are less likely to jump to a competing service provider, if they are going to lose 5+ years of historical business data and the resulting analytics. The Small Data strategy generates annuity revenue through archiving and access fees while reducing customer attrition rates.

To the innovative carrier, all these monetization strategies can be linked together – creating four new, complimentary revenue streams. Imagine a carrier reselling an app that sits on their own network that solves a problem they can uniquely spot and sell to that cultivates long-term, loyal relationships with their customers. And for carriers, like AT&T, that future is already underway.

By Kelly Fitzsimmons of the Hypervoice Consortium

Friday, November 22, 2013

Exploring the possibilities of a two-sided telco business model

Why should only the user pay for communication?

The answer to this question might seem obvious:  of course they shouldn’t.  But in many ways, this reflects the historical one-sided business model of the telecom industry, in which only subscribers or enterprises paid service providers for communication.  This model has served telcos well through decades of growth and high profits, but now operators are seeing their communication ARPU decline as communication gets bundled with connectivity. 

This is forcing to look for new revenue opportunities as communication gets bundled with connectivity. So it’s time to look to the other side, so to speak.

Two-sided business models are common in other industries.  Newspapers are perhaps the most obvious case, with a model built on both advertising and subscriptions.  This model is famously under pressure, with ad revenues falling drastically and some publications leaning more heavily on revenue from subscriptions.  But, even with all this, advertising remains a key factor in the media industry, specifically through the development of native advertising and sponsored content.

Or take NutraSweet, the brand name of the artificial sweetener aspartame. It was initially marketed directly to consumers but is also now “invisible” as an ingredient in more than 5,000 products, such as Diet Coke.  Google also makes use of a two-sided model, in which the company attracts users with free services on one side, while advertisers pay for information and exposure on the other.
And there are existing examples within the telecom industry, from toll-free numbers – where the business pays – to emergency service calls – when the cost is often picked up by government. 

Within telco, there has been a discussion of the two-sided business model for telcos for several years, and it has become clear that telcos have a great opportunity to sell services to “upstream customers” such as developers, governments and retailers, while continuing to focus on their traditional “downstream” customers.

Much of the discussion on the topic, however, has centered on OTT players and how to involve third-parties into the business relationship between customer and service provider.  But we feel there is real opportunity in addressing a two-sided market more directly by expanding into new verticals.

And there are many verticals to explore. A good current example is a federal US program in which the government provides mobile phones for certain disadvantaged job seekers, in order to help them stay in contact with potential employers.

Remote education is another area in which governments could pay for linking teachers with students.  There are intriguing efforts in this area – such as the “cloud school” approach being tried in India and the UK, in which students are linked to teachers solely via video. , And with the explosion in more traditional distance learning, this sector has the potential to be big business – and not a business in which only the student pays for the link.

The Telefónica Group has created an entire company – Telefónica Learning Services – to focus on e-learning, including integrated virtual classrooms and multi-format offerings for desktop and mobile devices. Examples of their projects include working with rural farmers in Spain, schools in South Korea and creating a digital platform with the National University of Distance Education in Spain, including support from MIT in the US.     

Then there is health care.  Hospitals could pick up the cost of communicating with some patients, if the alternative of clinic visits or increased illness proves to be more expensive.  An early use case for this is AT&T’s Remote Patient Monitoring program in the US.   

Here is a description from an eWeek article around its launch:
[The] platform could enable better management of chronic diseases, such as congestive heart failure and diabetes, as well as reduce hospital re-admissions, AT&T reported.  In addition, the platform will provide reminders to patients about their medication routines and educate patients about their conditions.
With some imagination and by bringing communication into new contexts, the two-sided business model will allow operators to reach beyond the limits of their existing business.  And that is something worth taking risks for.

By Bodil Josefsson for The Voice on Telecom

Monday, October 21, 2013

Monetizing voice in a WebRTC world

We've focus heavily on WebRTC in recent months, with posts on how WebRTC could work with RCS or the role of the signaling layer. We're also closely following WebRTC discussions on our Twitter account.  This remains a rapidly developing ecosystem, yet one without clear winners or losers.  

In June, we featured a guest post on how to find the right WebRTC partners from Kelly Fitzsimmons, a serial tech entrepreneur and co-founder of the Hypervoice Consortium. The consortium has the mission of articulating and advancing standards, capabilities and potential applications for Hypervoice, or the transformation of voice communications into searchable and shareable native web objects. 
Now we're happy to welcome back Kelly, as she examines the central question of how to monetize voice services in a WebRTC world. You can follow her on Twitter at @schnellerkeller


If there’s one thing we’ve learned in the past couple years, it’s that voice is about a lot more than just counting minutes. And new markets are emerging to prove this point, as voice transitions from transient to permanent, from transport to asset. 

More than a decade ago, early VoIP innovators such as Skype, Jajah and Vonage disrupted traditional carrier pricing, which swung the value-creation arrow swiftly from telcos to the consumer. Now WebRTC is taking this to a new level because startups no longer have the same kinds of capital requirements that the VoIP innovators faced. So instead of hundreds of disruptive startups, the dominant players are now going to face millions.

Very mindful of this dynamic, telecoms have been searching hard to replace voice revenue with revenue from alternative products, vertical services and even riding up the value chain to enterprise.  However, for all this effort, voice as a service has proven maddeningly difficult to replace as a profit center.

But what if we are looking at voice the wrong way?  What if voice has value in it beyond the quality and the speed in which it can be transported?  Asynchronous voice – best represented commercially today as voicemail and robo-calling – may be the key to unlocking immense value.  We are just starting to see value creation in voice as content and “big voice data,” and in both cases, voice is persistent – not transient. 

Customers are showing that they are willing to pay for value-added voice services that allow them to be more responsive and productive. New billion dollar markets are likely to follow from these first tentative footsteps.

Traditionally, startups fill the gap between the availability of technology and the unwillingness of established players to leverage it.  But dominant players cause disruption too. Apple turned the mobile industry upside down, shifting power from access providers to the handset providers. Sprint reinvented the long distance call long before Skype was even a possibility.

The future of voice requires players, both old and new, to radically re-think the role of voice and where its true value lies. WebRTC virtually guarantees an explosion of new ideas and possibilities, which means incumbents have an opportunity to identify the ideas with the most profit potential and double down on those projects and/or paradigms.  Instead of investing in the disruption itself, the smart telecoms will invest in the inevitable pockets of value created amongst the cinders of disruption.

By Kelly Fitzsimmons of the Hypervoice Consortium

Wednesday, October 9, 2013

WebRTC – friend or foe of RCS?

At the Voice of Telecom we’ve taken several different looks at WebRTC and what it means for telcos, including, among other things, the role of IMS in the future of WebRTC and how to spot successful WebRTC partners. 

We’ve also written a lot about Joyn and RCS.  But what about the two together?

It might be easy to see the two technologies as competitors – one open source and the other a developing telecom standard.  But this would be short sighted, for comparing WebRTC and RCS head on is like comparing apples to oranges, not apples to apples.

Instead, the right answer for operators is not to choose between the two technologies – they must be viewed as complements.

To recap, WebRTC is a technology that enables web browsers to use a device’s camera and microphone to allow voice and video calls without the use of plugins. One of its main advantages is that it has lowered the barriers for smaller startups and developers to build real-time voice and video calling solutions, and, according to Disruptive Analysis, the one-billion-WebRTC-devices mark was reached earlier this year.

WebRTC is also currently the only existing soon-to-be standardized technology on the market to create horizontal cross-platform communication services, encompassing smartphones, tablets, PCs, laptops and TVs, which adds value for both consumers and enterprises.

WebRTC gives operators the opportunity to offer telephony services to more devices, such as PCs, tablets and TVs. By combining  existing IMS technologies, operators will be able to provide, for example, one-number services. WebRTC is not going to lead to increased revenues and profits on its own, but taking communications to the web can prevent revenues from plummeting and open up new and intriguing enterprise opportunities, particularly for consumer-facing companies initially but with far reaching implications in the future. There is also a great marketing value in WebRTC, showing that operators can stay relevant and encourage innovation. 

One important characteristic of WebRTC, however, is its lack of a standardized signaling layer, and it’s up to each service provider to decide how this is handled.  We discussed this in a post over the summer, and it remains crucial to locate a person and make a call.

This is where IMS and RCS come in. With RCS, operators can offer a wide range of services, including – on top of voice and video – chat, presence, address book, video share, image share and file transfer. It builds on the standards of the telecom industry with the connected quality and reliability.  

So how could an operator use WebRTC and RCS together?  A good example could be to expand the range of devices – such as PCs and tablets – that RCS could support.  An operator could do this by using the WebRTC media framework, IMS for find and connect, with the RCS services on top to give added value.

To give you a sense of the possibilities, earlier this year, analyst Doug Mohney wrote two posts at 
WebRTC world that discussed how RCS and WebRTC could effectively put most current OTT players out of business.  From his first post:
The bigger picture here is that OTT players are going to find themselves displaced by a combination of carrier supported and promoted services in RCS -- because at the end of the day, carriers want to have a large number of customer relationships  -- and WebRTC providing a one-stop shop for developing third-party apps that can tie into third-party services in ways we can't yet imagine.
This is only one possible scenario and RCS is one example of many, in which WebRTC is a potential complement for telcos and not disruptive.  If operators think creatively and are open to new technology and business models, we see many more ways to make the most of telecom and web technologies - working together, not separately.

By Christer Boberg for The Voice on Telecom

Thursday, July 4, 2013

Vacation time is here

We are taking a summer break here at Voice on Telecom. During July and August we will be off-line, but in September we will be back as usual. Thanks for taking the time to read and comment on our posts. We look forward to returning and get the conversation going again.
All the best from the Voice on Telecom crew!

Wednesday, July 3, 2013

Exposing assets for enterprise apps is a key to API success for operators

Could it be time for operators to stop chasing the long tail?

The “long tail” consumer app market is worth billions, providing more than a billion smartphone users services such as Google Maps, Twitter and weather reports.  At the same time, there’s been a lot of talk about how operators can expose their services through APIs to take advantage of this smartphone boom.  And, in fact, operators have been exposing SMS and payment capabilities for several years, with some success though not yet for significant revenue. 

But we believe the revenue is out there, though perhaps not where most people are looking – Google Play or Apple’s App Store.  Instead, for at least the short term, we argue that operators need to shift focus to the “short-tail,” that is, exposing assets for enterprise apps, either B2B or B2B2C. This means working with fewer, yet closer, partners that integrate operator APIs into their complete service offerings.

Enterprises are, of course, being transformed by the same web-based solutions as consumers. New technologies and operator cloud offerings enable more contextual communications on a scale impossible to imagine before. But you can’t just translate consumer business models to enterprise.  Engaging and integrating with enterprise solutions requires a sharp focus on improving productivity, business processes and a company’s reach towards its customers.

With new standards such as WebRTC and HTML5, application development has been made exponentially easier, and some examples of enterprise-apps include video collaboration (including document sharing), voice control of apps even while talking on the phone and a range of medical applications.

However, operators also can’t ignore their current developer networks. They need these in order to scout for developers with the ability to create successful apps, and telecom-enabled long-tail services can also be valuable for an operator aiming to generate new revenue from API sales, gain additional revenue from increased traffic, reduce churn or increase network efficiency.

This diagram sums up nicely our vision for how the service exposure business should look :

We've previously highlighted AT&T’s innovative efforts in exposing assets and encouraging developers and have closely followed on Twitter the OneAPI effort from the GSMA.

And once again, AT&T is at the forefront of thinking about service exposure, this time as they shift towards enterprises.  In a recent interview with FierceMobileContent, Laura Merling, vice president, ecosystem development and platform development at AT&T, said "AT&T has always been focused on the enterprise. But now we are saying that this business is an extension of our business."

This means the American telco giant will make APIs available to select enterprise customers that aren’t available to consumer-facing developers, such as security for a financial services company. Merling also said the central challenge in this new initiative will be developing tools for other companies, rather than finished AT&T products.

That’s a big change in mindset, but it’s an important one, as operators reach towards a more flexible and innovative future.

By Bodil Josefsson for The Voice on Telecom